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salesforce.com, inc. Message Board

  • socal77go socal77go Nov 22, 2012 10:00 PM Flag

    Why Does CRM Trade For Only 5.5x FY '14 Revenues?

    Why does CRM trade for only 5.5x next year's revenues when its profitability is contingent upon accounting tricks and it provides a somewhat commoditized service in an industry that is becoming increasingly more competitive? Who cares if GAAP earnings are negative and its free cash flow is negative (if Business Combinations, Net of Cash Acquired is included as a capex item as it should be as it drives revenue growth)? The greaseball CEO says everything is (insert over-the-top ridiculously positive adjective here) so why does any kind of planet Earth valuation matter?

    Sentiment: Strong Sell

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    • I think you give them too much credit. Even if they were able to turn revenue into profiteventually at say 10% it would take them ten years to achieve standard market valuation of the PE23 range.

      It is a matter of time before the market will demand some profit from their business model.

      Yes, money can be made trading, but it will have to conform to value at some point. Awfully risky holding this thing for the long term. Can you say Computer Associates?, they have renenue that is growing, now at 4.5 billion, and they trade at a share price of 22 when it used to be at 70.
      It took eight years of hype before it broke. Crm is now in its sixth year of hype.
      778/776 is only a beat of .0015 of expectations, albeit .35 year over year. There are oil drillers growing revs more than this, and that is in a down market.

    • And they are acquiring revs for huge premiums. This is a guarantee to blow up. The only justice would be in a fantasy world where the actual stock buyers here were forced to hold for 5 years without being permitted to sell. That would be fun.

      Sentiment: Strong Sell

    • obviously you got crm wrong. not many companies are growing sales. crm is..and by blowing out all estimates across the board!! buy dell and hpq..they make lots of money!! thats theory you are using!! next year this time crm will probally be making 1billion a year...

      Sentiment: Strong Buy

 
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