salesforce.com, inc. (CRM)

finviz.com

Can someone please explain to me why this stock has held a triple digit pe for 4 years. I lost money shorting it in 2006, then stuck to shorting on caps. Wrong every time. Maybe 5th times a charm.

Salesforce is a solvent rapidly growing company with an enviable product niche. that being said, I think its 150% price runup this year is unjustified and the company will have trouble living up to stratospheric expectations. Currently trading for 100 times its estimated earnings for the 01/10 fiscal year, 10 times book value and 7 times sales.

Hard for firms to change CRM software...very sticky

Downthumb. 101% sales growth rate. Huge cash flow. No debt. 88% margins. 10% short base. High valuations. Large declining deferred revenues. Slowing growth.

Mad Money - Cramer Pick

will like to see where this goes.

Way overvalued! Obviously the Bulls are letting their horses run with this one. Due for a big pullback. I just shorted this stock. If you have profits on the table, take your money and wait for the correction to buy back in.

Companies are embracing the cloud computing concept. "Cloud computing is a broad term for a shift in which organizations have their technology operations managed on a hosted basis by technology vendors, with data stored on huge servers and accessed on a metered basis over the Internet."

Current P/E @ 102.5
Forward P/E @ 76.54

Way overvalued.

I think that given a long time frame, this is a sure buy & hold. The valuation is high, but this is the time for me to consider a starter position.

Every business will be using this in the future. I don't care how high the P/E is, it's worth 3x the current stock price.

Open source/low cost competitors are losing momentum. The crisis came too soon for any competitor to stand up tall.

Thinking less for myself and going on Keyne's poigniant observation: "Successful securities investing can be less about your personal projections of a firms growth and more about reading what others may think is a sound investment."

Product is easy to use and very flexilbe and adapatable to any business model. 63,000 clients and growing fast!

This is the "hot" stock of the moment and unless the market crashes again I don't see it going lower anytime soon. My company (2000 employees) began using SupportForce (call management) about a year ago and from an end user perspective it needs a lot of work in this area. It is slow, kludgy, requires lots of scrolling up and down to locate needed information, and the screens are very busy. Company purchased for the outstanding reporting capabilities but the areas we need to report on cannot be easily pulled from this software. I can't speak to the Sales side, it could be superior software, but from the support side it isn't ready for prime time.

Superior software. Better than any other.

When you ask people their opinion of SalesForce.com, the responses seem to fall into two camps. The bullish camp typically hails SalesForce as the "leader in" (or even "inventor of") something called "cloud computing," cites historically consistent revenue growth, and points to a "potential market" (however it is defined) of a few billion dollars. Bears counter by pointing to astronomical ratios (as of this writing: P/E = 103, FP/E = 64, P/S = 5.5, P/B = 8.25), noting that insiders are selling a lot more than they are buying, and decrying the current "over-hyped" and "ill-defined" state of the cloud computing movement.

If you ask me, both sides have legitimate points. It's hard to argue that SalesForce hasn't been a highly successful pioneer in a previously unoccupied space (namely, software-as-a-service, which isn't exactly "cloud computing"), and as a result has staked out a sizable market share and established some nice recurring revenue streams. However, I think the "over-hyped" argument also has merit, as I see a parallel between the manner and levels with which the market currently values this stock and the way it valued some of the dot-com flameouts of the late 90s. The sky-high ratios tell me that there's a lot of expectation for torrid growth already priced in, but with big-name competitors (Oracle, SAP) launching their own SaaS offerings, and smaller, more agile and specialized shops quietly taking away market share, I'm not sure how realistic these expectations are. Additionally, it seems that SalesForce.com has some issues with end-user adoption, so we may see churn increase as this dissatisfaction causes organizational decision-makers to look elsewhere.

And then there's the whole "cloud computing" element. As a software executive, let me make one thing clear: at this point in its nascent history, no one has really agreed upon what "cloud computing" is exactly. This gives software marketing departments free reign to define "cloud computing" in whatever way best suits their company's desired message and positioning. Indeed, if you read the "Cloud Platform" page on SalesForce.com's website, it would seem that they've recently unveiled a mechanism by which "anyone" can "easily" build their own "application in the cloud" from a set of available components -- in other words, an API. While this is a welcome addition to their offerings in the name of innovation (following in the footsteps of Google and Amazon), I can tell you first-hand from years of systems design and integration experience that nearly all APIs promise more than they can ultimately deliver, so whether the SalesForce "Cloud Platform" ultimately goes anywhere (or adds anything to their bottom line) remains to be seen.

Bottom line: there's no doubt that SalesForce.com has changed the way we think about software and how it is delivered, but once the dust kicked up by its torrid growth and the surrounding hype settles, the foolish fundamentals would suggest that this stock faces an increasingly higher likelihood for underperformance.