In the past, "pay to play" became public when Larry Ellison return a million dollars to the CRM CEO who had paid to give a keynote speech and Ellison wouldn't approve the time of the speech. I don't expect the cost of giving a speech at this conference as high. The question is whether speakers at this conference will pay or "donate" money to the conference.
Spending much more money to establish lavish presences in London and Vancouver won't help the stock price through at least 2015 and even the CEO has said he doesn't expect earnings until at least 2016. What does that mean when it comes from a CEO who has been more optimistic than warranted in the past?
CRM was a short when it was in the 60's. It continues to be a short despite what some other stocks do. CRM is in the tough position of being too expensive for other companies to buy and doesn't have the funds to acquire growth with earnings. Some would even argue the use of the term "growth" when there aren't earnings in a 15 year company. Some have argued that anyone can show "growth" by charging less than expenses. However, some don't consider that growth when a 15 year old company has revenues without earnings.
How much money might a company spend to try to get people to ignore the lack of real earnings? There are many examples of stocks that faltered and then descended more and more.
None of this changes the facts that CRM doesn't have GAAP earnings and has admitted that they don't expect any GAAP earnings until after FY 2016. Recent reports about increasing expenses may be troublesome. Excessive rents and naming rights, along with a report about insiders getting trips to Hawaii (in addition to continuing equity awards) are likely to delay earnings more. Some doubt CRM won't have GAAP earnings even years beyond what the company has announced.
Competition and pricing pressures are increasing with the possibility that value companies with deep pockets will continue to buy small cap competitors in the single digit billion dollar price range.
CRM rolled over at the end of regular trading hours. The 50 day MA is poised to drop below the 200 day MA. Though there was a bounce today, the stock couldn't hold levels that were reached before releasing the quarterly report. CRM now has lower highs.
CRM's defenders remind me of RIMM, when RIMM bulls couldn't believe that competition could hurt RIMM. After RIMM's initial drop from the 120's to the mid-50's, it rallied into the 80's. I shorted at 89 and 91 and didn't feel good about it when the stock went higher into the 90's. I added in the 98-99 area, when some people couldn't imagine (or wouldn't admit to the public until they unloaded) competitors could contribute to toppling RIMM.
Last year when people were still talking about RIMM, I heard compliments for managers and for analysts who had turned negative about RIMM when it was 30 and there were "wows" about someone having turned negative on RIMM at 35 or 40.
At its top, RIMM was seen as impervious to competitors. Though RIMM and CRM have different products and services, the commonality is competition. There is growing competition facing CRM and the competitors have money that RIMM doesn't. That's one of many reasons I'm negative about CRM.
Free cash flow is created when insiders who acquired shares for little or no money sell those shares at market price. But there's no accounting for the "gifts" of monetary value to insiders. The cash flow "follows on the heels" of gifts of value handed out to insiders. The insiders get the value.
My broker's figure isn't the problem. I trust my broker's figure. If yesterday's volume figure remains on Yahoo finance, some people might misinterpret it.
Most of the time, the "enterprise value" is shown as being higher than the stock value. According to Yahoo Finance, there aren't specific ways of arriving at the "enterprise value." Do those predictions from CRM follow a distinct formula or are they wishful despite CRM doesn't even have GAAP earnings? If there are small GAAP earnings in the future, the future PE will likely plummet since a three digit PE would require sizable earnings.
A 15 year old "growth company" without GAAP earnings may offer growth in dollars given to insiders, but diluting stockholders isn't growth. There's a pumping article about CRM's CEO's predictions beating anlysts' predictions. That doesn't change the fact that CRM doesn't have GAAP earnings and even the CEO admitted a few months ago that he doesn't expect GAAP earnings until at least 2016 and (or later). At that point, even if CRM has small GAAP earnings, the price of the stock would have to fall greatly. Also, by then, CRM might have the excuse of competition for their poor showing since some competitors have "deep pockets" and can charge far less than CRM at that time.
IMHO, a CEO's predictions (especially when they "beat" (LOL) analysts are worthless if the predictions are from a CEO of a 15 year old company that doesn't have GAAP earnings.
Considering that CRM is in indices that are up significantly today, there's a lot more downside for CRM in addition to why the stock is down so far today.
Likely, "he" didn't. I closed out my puts about twenty minutes ago, but I'm holding my shorted shares and will short more if CRM bounces more. I'm guessing that selling and shorting will push CRM down more.
Guidance from a CEO may lack objectivity or more. As in 2000-2001, will some company insiders be among the last to question viability? CRM could survive and it could even be purchased by another company, but at far lower prices than it's trading at now. A value stock that people here scoff at now could end up being a purchaser, but only at half the current price or even lower than that.
There were no earnings. Even the non-GAAP "earnings" barely deserve 50. The bounce that occurred before the report went higher than warranted by the results, IMHO. I just replaced part of the shares I'd covered lower. If others do that, too, that means downward pressure, not upward pressure.
The message is in the headline
BTW, value stocks have boards that allocate money for dividends and have additional funds that bring flexibility. Some have bought growth, but haven't considered CRM worth the price. CRM is in debt and wrests value from outside investors to pay excessive money to insiders. Even the "cash flow" is manipulated because shares of stock insiders are gifted and then sold at market prices appear in the CRM financials as "cash flow."
The "value" stocks some bash have been spending money and changing their approach in order to wrest more of the cloud business. (Beyond that, some think the ceilings on the value of "cloud" are lower than they thought.)
Though there are likely no buyers for CRM anywhere near this level or at any other level beyond half (or even less) of CRM's current value) some would say that such a bombastic CEO has no interest in being anything but CEO of his own company.
Besides the value companies (formerly growth stocks 15-20 years ago), robust companies such as GOOG are in the arena. AMZN is also in the cloud arena, though AMZN has some financial issues.