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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5 Could-Be Bubbles Waiting To Burst

One of the oldest sayings of Wall Street (and one that happens to be true!) is that "there is always a bull market somewhere." In other words, no matter how bad one segment of the market may be performing, there is almost always some unrelated asset that is doing well at the same time. Taking that to its logical extreme, if there is always a bull market somewhere, there are almost always a few potential bubbles emerging. So which markets look like they have heated up to the melting point? (For more, check out The Myth About Market Bubbles.)

1. Bonds
To a lot of people, the current yield on government bonds just makes no sense. These people see the federal budget deficit, the huge debt burden and the risk of a stagflation-type environment of low growth and high inflation, and cannot understand how investors could be piling into bonds. Moreover, there is a strong sense that these artificially low rates are just a prelude to a withering bout of inflation that will smack fixed-income instruments hard.

For better or worse, there are other dynamics at work in the bond market. For starters, banks can make a solid "carry trade" on government bonds - banks take their ultra-low cost deposits and invest them in higher-yielding government securities. 


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http://stocks.investopedia.com/stock-analysis/2010/5-Could-Be-Bubbles-Waiting-To-Burst-CRM-VMW-CTXS-LOGM1020.aspx

VMWare's Vaporous Valuation

A large percentage of investors call themselves GARP (that is, "growth at a reasonable price") investors, but there is a big difference between those who focus on the "-arp" and those who focus on the "guh". Fast-growing software company VMware (NYSE:VMW) highlights this dichotomy, as there is no question about the torrid growth here (and the potential for more), but quite a fertile field to argue about just how reasonable the price is right now.  


The Quarter that Was
Forget the "yeah ... but" quarters you have seen from other companies in this earnings cycle, VMware delivered pretty much anything a growth investor could want. Revenue jumped 48% from last year, as the company saw strong renewals in enterprise license agreements and balanced growth across both the license and service segments.

For the full piece:
http://stocks.investopedia.com/stock-analysis/2010/VMWares-Vaporous-Valuation-VMW-CTXS-MSFT-ORCL-RHT0722.aspx