Through The Fly's Eyes: Salesforce.com
Larry Schutts is a contributing editor for Theflyonthewall.com and the Vice-President of Stockwinners.com.
Saleforce.com: An Alternate Path To Successful Sales
One of the more innovative experiments underway in the software industry involves the rental of online access to business applications. In this regard, there is an outfit in San Francisco that is expanding sales horizons.
Salesforce.com (CRM) provides business clients with on-demand customer relationship management services. Its hosted applications offer a rapidly deployable alternative to buying and maintaining enterprise software. Subscribers use the firm's suite of nearly 600 programs to systematically record business data, manage customer accounts, track sales leads, evaluate marketing campaigns and provide post-sale services. The company's applications are offered in 14 languages and can be accessed from PCs, cellular phones and personal digital assistants. Clients include Electronic Arts (ERTS), Juniper Networks (JNPR), Sprint Nextel (S), Staples (SPLS), Symantec (SYMC) and Time Warner (TWX).
The stock popped recently, on reasonably sanguine analyst responses to last week's quarterly report and on talk that Salesforce.com and Google (GOOG) are discussing an alliance that could help them compete more effectively with Microsoft ( MSFT). Shares popped on the news and then moved into a bullish "flag" consolidation pattern. Prices frequently exit flags moving in the same direction they were traveling when they entered them. In this case, that would be to the upside.
Brokers recommend the issue with eight "strong buys," seven "buys," 12 "holds" and four "sells." Analysts see a 250% growth rate through the next year. The most recent CRM quarterly sales growth rate (55.14%) compares favorably with industry, sector and S&P 500 averages. Institutional investors hold about 66% of the outstanding shares. Over the past 52 weeks, the stock has traded between $21.64 and $50.43. A stop-loss of $38.50 looks good here.