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  • climbwitharope climbwitharope Aug 20, 2011 1:22 PM Flag

    Why CRM will fall much deeper:

    Reality is now hitting. It dawns to investors that this is not a growth stock, but something far from it. A company that loses more money the more it “grows”. A company that has lost its mojo, no matter how blazen the so called analysts rate it as “buy” or upgrade it because it’s “oversold”. No matter how much Benioff keeps bragging about his “incredible monster quarters”. Investors start to realize it’s a hype, helped by friendly media, carving out profits at the expense of the shareholder. It hits them that that the valuation of 10 times revenues is completely out of touch with reality for such a stock. This is why they sell. And will keep selling. The only buying going on is from shorts covering their positions. There is no support left from smart investors.

    Place yourself in the shoes of a newcomer. First glance, you will see a (growing) PE of more than 500, and a valuation of 10 x revenues. This is crazy even for a tech stock. There is no other stock more overvalued (except maybe Linkedin, but that is much smaller). A deeper look will show that the company actually just began to make losses and will have negative EPS for the full year. Then you will see that it is already 30% down from its old time high. You will see that insiders keep selling their own stock at current prices. Why would you buy, if you are sane?

    The more shorts cover, the more selling pressure, as there is no support in traditional terms of valuation. It won’t be a bargain for a long way down.

    Add to that an imminent recession and growing competition, and your price target is under 50.

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    • the 80$ will be coming soon this week, God willing, and I've seen that before for many stocks and CRM on of them, so CRM equal price of FFIV and I prefer it than CRM as fundamental, and technical it has an ugly pattern which repeat themselves again and again so follow the trend and don't hesitate to short because time for downside and will take many quarters to evolution when that time is coming you can say long or stay out if you not short.

    • ive already made my money shorting this stock from 160 to 113.. I want this thing to rally like crazy to hit 130 so I can short it again, whats wrong with that??

    • Layoffs sweep Wall Street, along with low morale

      2 hrs 15 mins ago

      NEW YORK - In early summer, before layoffs began sweeping across Wall Street, billboard-sized photos of employees were plastered on the walls, pillars and elevator banks of Credit Suisse Group AG's offices in the United States and abroad.

      The museum-quality prints, depicting workers from administrative assistants to senior executives, were emblazoned with motivational words like "Proactive" and "Partner." By mid-July, however, the photos disappeared and the Swiss banking giant began laying off 2,000 employees.

      Security guards prevented employees from taking cell-phone pictures as the posters were stripped away, according to one employee who was present.

      "It sent an entirely wrong message," said an employee, who was not authorized to speak publicly. "Management literally threw away that kind of money on something so trivial, while planning to cut thousands of jobs."

      A bank spokeswoman declined to comment on the internal campaign or the employee's comments. Credit Suisse's timing illustrates the unanticipated dangers of rampant job-cutting, which tend to run in cycles on Wall Street. Employee morale often plummets at a time when survivors are asked to pick up more responsibility and customer relations can suffer as service and relationships deteriorate.


      What's more, layoffs inartfully constructed can come across to shareholders as Band-Aid solutions that at best temporarily cut expenses and at worst pare away reserves of talented people.

      "They finished cutting the fat and now they're into the muscle and bone," said Tim White, a managing partner who specializes in wealth management at the recruiting firm Kaye/Bassman International in Dallas.

      Credit Suisse has plenty of company in its cost-cutting campaign. HSBC, Barclays PLC, Goldman Sachs Group Inc and Bank of New York Mellon Corp have announced plans to ax thousands of workers in recent months. On Thursday, Bank of America Corp Chief Executive Brian Moynihan sent a memo to senior executives outlining plans to cut another 3,500 jobs.

      The planned cuts at Bank of America have pushed the number of financial sector layoffs this year to 18,252 -- 6 percent higher than in the comparable period in 2010, according to Challenger, Gray & Christmas, an outplacement firm that keeps a daily tab on layoff announcements.

      Some companies began the culling earlier this year -- HSBC has already axed about 5,000 employees, with 25,000 more set to get pink slips by the end of 2012 -- and others, such as Goldman Sachs, said that cuts will come by year's end.

      That is not good for morale. Time fot a nice vaca.

    • market makers holding the price to protect against a flood of short selling. so the decline will be steady. The "Hold" ratings from the analysts will give smart money a chance to get out, before the "Hold"rating moves to "sell", by that time the retail investor is toast.

    • I don't quite follow your logic. Short covering drives the price UP. When a stock is in free-fall, why on earth would shorts get in the way?

      • 2 Replies to leebobs55
      • I will explain the logic then. Shorts always get in the way of a decline, although they only delay it and don't stop it. As you pointed out, they have to buy back to take a profit. This is driving the price up, as you noted. Shorts are just as any other investors. They are driven by fear and greed. When they have a profit they are tempted to take it. Most shorts consider a 10% decline in one day a rather nice profit. So many take it. This is what we saw on friday. Intraday from 114 to 124. A classic short squeeze (shorts taking their profits, some in fear that their profits could run away from them). When they were done, the selling continued driving it below the closing price.

        That selling was of course done by longs. The logic therefore is that the only buoyancy in the stock is caused by shorts. But fundamentals and valuation will pull it down anyway since there is no rational reason to buy. It doesn't make sense to buy a stock that is valued at 10 times sales and decreasing its earnings to losses without any forecast on improvements. Only dumb money follows the false music made by Benioff and his friend analysts like Cramer.

      • layman term what he saying this POS shouldn't being trading in $100 range but it should be trading in teen. Happy investing.

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