seekingalpha.com/article/...out-long-term-profitability-remain
Summary
Salesforce.com latest earnings were very strong as the company grew revenue, earnings and deferred revenue above expectations.
Profitability is looking good for CRM so far this year as the company is nearly to GAAP operating profits.
Korektur zu #16. mus heissen will SAP übertreffen
Questions still remain for us as to how well the company's long-term profitability will do in the long-run.
.....Is it time that profitability starts to be looked at more closely? Additionally, the company is beginning to offer new products and diversify its revenue, which will be an intriguing aspect for the coming year. Can the company be successful with its new Analytics Cloud and improved Intelligence Engines? Finally, the company is seeing competition growing. Oracle (NYSE:ORCL), IBM (NYSE:IBM) and most of all Microsoft (NASDAQ:MSFT), among others, are nipping at the heels of CRM. The SaaS industry is definitely continuing to grow, but drops in Salesforce's leading market share will hurt shareholder value.
Since Salesforce went public, the company has averaged massive growth year/year with only one year since it went public under 25% growth...
As Benioff said:...another excellent year in operating cash. We delivered more than $1 billion - $1.2 billion in operating cash flow, that's up 34% year-over-year and we're the first cloud computing company to deliver more than a $1 billion in operating cash flow.
Another major factor that we believe is crucial to watch for 2015 (FY16) was a more diversified revenue stream. The company's SaaS business has been the main dominant revenue force, but new products are expected to become a larger part of the total pie moving forward. The company's new Analytics Cloud and attention to putting analytics into its business is a major potential growth input.
What the company is envisioning, overall, though is being more than just really great cloud-based software that can make marketing, sales and service better, but now it is integrating science to its users, giving them the opportunity to analyze data in the same way they revolutionized marketing, sales and service.
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Conclusion - The Bull Case and The Bear Case
To us, our bull and bear case remain the same right now. The company's business life cycle is starting to shift and mature. Yet, the company's need to generate profits is crucial to generating free cash flow, which is how the company can be judged. We believe the company has a lot of upside if they can start to produce some earnings growth, but right now, where the profitability will go remains. The question is how fast will it be and will it hit revenue as that competition increases. .....