I'm not too proud to admit that Salesforce.com (NYSE:CRM) confuses me on many levels. The organic sales growth is clearly there, but these are still early days, and it's uncertain whether Salesforce.com can withstand Microsoft (Nasdaq:MSFT), Oracle (Nasdaq:ORCL) and SAP (NYSE:SAP) taking serious aim at the cloud business. But, even more important is the question of Salesforce.com's profitability - the company's profitability under the generally accepted accounting principles (GAAP) looks rather lousy (as do the returns on capital), but the sell-side is not bothered by this, and the cash flow picture is more encouraging. All in all, though, this looks like an expensive stock that has to continue to execute flawlessly to justify its price.
Mixed Fiscal Third Quarter Results
While some will focus on what looks like encouraging guidance from management, the reported results for the fiscal third quarter have some hair on them. Reported revenue rose 36% from last year and 7% from the last quarter, with constant currency growth of 34%. Subscription revenue rose 36%, deferred revenue rose 32% and billings rose 29% - dipping below the psychologically important 30% growth rate.
Please follow the link for the full piece:
http://stocks.investopedia.com/stock-analysis/2011/Profitless-Prosperity-For-Salesforce.com-CRM-MSFT-ORCL-SAP-RHT-VMW-GOOG-N-RNOW1122.aspx
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