Large Enterprises Leave Core Systems Alone, But Adopt SaaS Division by Division: Expert Analyst Alex Zukin Discusses Shifts in the Space with The Wall Street Transcript

Wall Street Transcript

67 WALL STREET, New York - June 7, 2013 - The Wall Street Transcript has just published its Business and Application Software Report offering a timely review of the sector to serious investors and industry executives. This special feature contains expert industry commentary through in-depth interviews with public company CEOs and Equity Analysts. The full issue is available by calling (212) 952-7433 or via The Wall Street Transcript Online.

Topics covered: Application Software Consolidation Activity - Cloud Computing and SaaS Trends - Cloud Computing - SaaS and PaaS

Companies include: Salesforce.com (CRM), NetSuite, Inc. (N), Oracle Corp. (ORCL), SAP AG (SAP), General Motors Corporation (GM), The Coca-Cola Company (KO), Toyota Motor Corp. (TM), International Business Machine (IBM), Ultimate Software Group Inc. (ULTI) and many more.

In the following excerpt from the Business and Application Software Report, an expert analyst discusses the outlook for the sector for investors:

TWST: Where are you pointing investors at this time? Who is at the top of your favorite list?

Mr. Zukin: I still like Salesforce, and I really like NetSuite. There are a few other companies that I'm growing our coverage on, that in over the next few months that I'll be able to talk about more broadly, that I think represent good opportunities. I like to segment my universe into companies that are either going all out for growth or growing at a reasonable pace.

The difference there is, when companies are going all out for growth, they're really not concerned about their operating profitability today, because they're telling investors, "we're reinvesting every dollar we make, and we're going to get bigger and bigger and bigger, and at some point in the future, we can dial down our profitability that's directly linked to the amount we're spending on sales people. So if you want us to be more profitable, we'll hire less sales people than marketing people."

Then there are other companies that decide, "we're not going to grow 30, 40%. We can, but that's just not the direction that we want to pursue. We would prefer to grow 20% to 30% and increase our operating profitability and have some of that flow through to the bottom line."

And I think there is no right strategy; it really depends on the market, it really depends on the management and what they want to achieve, but I do see those distinct areas within the market evolving. And so I think that's also good for investors, because some investors have a style of making sure to see continuing improvements in operating profitability, and so investors don't care about that and just want growth.

TWST: So there's little something for everybody?

For more of this interview and many others visit the Wall Street Transcript - a unique service for investors and industry researchers - providing fresh commentary and insight through verbatim interviews with CEOs, portfolio managers and research analysts. This special issue is available by calling (212) 952-7433 or via The Wall Street Transcript Online.

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