Salesforce.com (CRM) surged to new all-time highs after reporting a Q4 FY2013 adjusted loss per share of 2 cents, narrower than the Zacks Consensus Estimate of a 3 cent loss. If that’s the not-so-awful result investors were hoping for as they drove the stock up 10% from under $170 to over $186 since last Friday, then maybe they are happy with this company who could take another year to slowly return to profitability. Salesforce.com is the giant $27 billion leader in on-demand business software services. The company’s Salesforce suite of on-demand CRM applications allows customers to manage and share all of their sales, support, marketing and partner information on-demand. Let’s take a look at what might have cheered investors about their recent report and then we’ll see why it fell to a Zacks #5 Rank (Strong Sell) afterwards. Special Offer: Stock picks from Forbes Dividend Investor are up 12.7% vs. 7.6% for identically timed buys of the S&P 500 index since July. Average yield is 5.8%. Click here now to try Forbes Dividend Investor free for 30 days. Revenue Picture Encouraging Revenues in the quarter were $834.7 million, up 32.0% from the year-ago quarter. The quarter’s result was also above the company’s guidance range of $825.0 million to $830.0 million. Salesforce witnessed an improvement in revenues from all its business segments. Subscription and support revenue was $785.5 million, up 32.0% on a year-over-year basis, while the Professional services and other revenue was $49.2 million, up 31.0% year over year. Geographically, the company witnessed decent revenue growth in all of its operating regions. Revenue in the Americas was up 34.0% to $583.0 million, while Europe grew 37.0% to $149 million, and Asia logged a 17.0% boost to $103 million. Company Guides Sales into the Clouds For the first quarter of FY2014, the company expects revenue in the range of $882 million to $887 million, expecting an increase of 27.0% to 28.0% year over year. This is clearly driven by their ability to upgrade business service offerings with new cloud-based applications in addition to attracting new clients. For the full year 2014, revenue is expected in the range of $3.82 billion to $3.87 billion, up 25%-27% year over year. While there are a handful of analysts maintaining price targets over $200, like Deutsche Bank who praises the recent acquisition and integration of Heroku technology (no, I don’t know what that is but it has something to do with developers being able to write programs that work with CRM stuff), the Street hasn’t clamored to raise EPS estimates for the new year. Until we see the estimates picture stabilize, I can’t see adding to positions here, much less chasing new ones. And with the stock 23% over its 200-day moving average, those with profits might consider taking some off the table. Based on the consensus EPS forecast of $1.97, CRM trades at a mighty lofty 94 times expected January 2014 earnings. The Costs of Being the Giant CRM‘s gross profit expanded 31.4% year over …read more
Source: FULL ARTICLE at Forbes Latest