Investopedia: Profitless Prosperity For Salesforce.com?

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.

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Investopedia: Oracle Expands Its Cloud Business ... RightNow

Oracle (Nasdaq:ORCL) has always been a notably acquisitive company, so it was really only a matter of time before they announced another meaningful deal. Likewise, the company is actively trying to build it out its cloud computing and software as a service (SaaS) business, and stay ahead of the likes of SAP (NYSE:SAP) and Salesforce.com (NYSE:CRM), so a deal in the SaaS space was likewise just a matter of time.


Those two timelines met on Monday morning, as Oracle announced that it had reached an agreement to acquire customer service specialist RightNow (Nasdaq:RNOW) in an all-cash deal.

The Deal
Oracle will be paying $43 per share in cash for RightNow. That works out to about a 20% premium to RightNow's prior closing price, and a total net price tag of about $1.5 billion - not exactly a huge deal for a company with $16 billion in net cash on the balance sheet, and over $5 billion of free cash flow in the last quarter. (Free cash flow is a great gauge of corporate health, but it's not immune to accounting trickery. For more, see Free Cash Flow: Free, But Not Always Easy.)


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http://stocks.investopedia.com/stock-analysis/2011/Oracle-Expands-Its-Cloud-Business--RightNow-ORCL-RNOW-SAP-CRM-N-SFSF-LPSN1027.aspx

Salesforce.com And A Valuation In The Clouds

Say this much for Salesforce.com (NYSE:CRM) - they make life hard on the value crowd by posting excellent growth. With a great third quarter and organic growth that much larger companies like SAP (NYSE:SAP), Microsoft (Nasdaq:MSFT), Oracle (Nasdaq:ORCL) and IBM (NYSE:IBM) could only hope to get, Salesforce.com keeps the argument alive that it can grow into a dominant software player and grow into its rich valuation. 

The Quarter That Was
By any reasonable standard, this was a hot quarter for Salesforce.com. Reported revenue rose 30% from last year's level. Likewise, deferred revenue and billings were strong. Deferred revenue rose 27% from last year, while billings climbed 35% annually.Although not necessarily revenue metrics, the company did experience good renewals and lower churn. Looking further, the company's Chatter feature is now with 70% of its customer base in less than six months, while the Service Cloud has about 20% adoption so far. 


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