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Salesforce shares set to tumble-Barron's

NEW YORK | Sun Jan 23, 2011 5:17pm EST

NEW YORK Jan 23 (Reuters) - It will be difficult for shares of cloud computing company Salesforce.com Inc (CRM.N) to go anywhere but down, according to a report in the Jan. 24 issue of Barron's.

The shares of the company have risen 92 percent over the past year and analysts are trading traditional valuation metrics for those popular during the dotcom boom days: cash flow and earnings excluding employee-options expense, according to the report.

Insiders like Chief Executive Officer Marc Benioff are selling- rather than buying- shares and tech giants Microsoft Corp (MSFT.O), Amazon.com Inc (AMZN.O), Google (GOOG.O), Oracle Corp (ORCL.O) and SAP AG (SAPG.DE) are growing into serious competitors.

"No doubt Salesforce shares will continue to fly high, as long as the company -- which boasts a solid balance sheet with $1.3 billion of net cash and investments -- continues to boost its revenue at a 20% to 25% annual clip . . . but any hiccup now could send the shares tumbling hard, especially if investors analyze the company's sharp rise in expenses and the continuously growing number of diluted shares outstanding," Barron's wrote. (Reporting by Clare Baldwin; Editing by Bernard Orr)

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Comments (1)
sunilshah wrote:
Barron’s is the definitive financial magazine. Rarely have they been so forthright!!

after finally acknowledging the turbo-charged QE2 boost has pushed high beta stocks further into absurdity, CRM’s move from 100 to 140 makes more sense (ah hindsight!). Check out Hussman’s qtrly report on how a very smart value investor got hammered in 4q.

But my feeling is:

as long as it’s not replaced by QE3 (would bet against that- look at the $ recent slippage despite the Euro’s woes- the Fed must be aware of the risks of a disordely $ collapse), then CRM is deprived of new fuel…and the momos get increasingly anxious….and once the momentum falters…the slide downhill begins.

Not a moment too soon! Cant wait for the bloodbath, after some week resistance by momos on Monday, it could fall by +10%.

Jan 23, 2011 6:58pm EST  --  Report as abuse
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