Ian Gilyeat

Salesforce.com Needs Focus On Margins, Acquisitions

The thin margin is easy to understand given their focus on growth. Their spending continues to outpace the amount of cash they are putting on the balance sheet. Deferred revenue is up 24% whereas revenue and headcount growth continue in the 35% ranges.

Also, if they're going to acquire, I would expect it to happen in the professional services arena. They are now breaking out professional services revenues for investors. This indicates a long-term committment to growing this revenue segment. Companies like Astadia are attractive targets to help balance the revenue mix and boost professional services.