Silicon Investor (SI) -- The First Internet Community

STOCKTALK

We've detected that you're using an ad content blocking browser plug-in or feature. Ads provide a critical source of revenue to the continued operation of Silicon Investor. We ask that you disable ad blocking while on Silicon Investor in the best interests of our community. If you are not using an ad blocker but are still receiving this message, make sure your browser's tracking protection is set to the 'standard' level.

Strategies & Market Trends : The New Economy and its Winners -- Ignore unavailable to you. Want to Upgrade?

To: The Ox who wrote (56626)	2/24/2014 12:41:00 PM
From: Lizzie Tudor	1 Recommendation Recommended By Doren Read Replies (2) \| Respond to of 57684

one problem that confounds bears with these cloud companies is that its not just a matter of deferred earnings- even SALES are deferred. They look more expensive than they are, although yes, they are very expensive. My opinion is that technical infrastructure spending (the old "IT dept") has been depressed for years now and this is going to resolve itself one way or the other. Companies that are making appropriate investments like Nordstrom are stronger than Sears, Macys etc who tried to outsource the whole thing as a cost cutting exercise. I realize companies got burned in 1999 by over investing, but get over it. I question the "size of market" estimates coming out of Forrester for some of these infrastructure spaces. If you aren't married to investing in these companies but just want to make a buck trading, I recommend N (netsuite). I was in it last year and its a cash register. Very thinly traded, the stock needs to split but has not. Nobody ever sells but the insiders, and it seems to move 2 points a day in a good market. Ns product is a cloud ERP, which is the COA and all that - not something ideally suited to cloud so it is not as good as CRM. Still if you are a new upstart company you aren't going to implement Oracle and put up with their salesforce. Realistically, N stock price could double just on the fact that they offer an alternative for a space customers must implement.

To: The Ox who wrote (56626)	4/7/2014 10:15:23 AM
From: The Ox	Respond to of 57684

These stocks have all come down significantly that they don't appear as excessively priced. Pricey, yes but much, much more reasonable now. Here's a snip from my post in late Feb., fwiw. For example, we bought SPLK at $31/share but I wouldn't buy it here at $90/share, even with the solid growth they've shown over the past 2 years. Trading at 35 times sales seems a bit excessive, even with their solid gross margins and revenue growth. Similarly, we purchased CRM the last time it fell below $40, but would certainly hesitate to pay $64, even if they are much more in line at 10 times sales. I simply scratch my head at WDAY (p/s 45) and FEYE (p/s 57). Great products, and from what I can see, very solidly run but based on current growth expectations, I just can't pay a 4 year forward valuation for them.

To: The Ox who wrote (56626)	5/30/2014 1:05:11 PM
From: The Ox	Read Replies (1) \| Respond to of 57684

SPLK price targets lowered across the board, from unbelievably high targets. This is a perfect example of doing the exact opposite of what analysts often suggest. Most of them completely lose credibility when they drop a price target by 33% to 46% after the fact. Certainly, at $40/share it's more in line with reality and could be a great long term buy. However, knowing that growth is not going to be quite as robust as the street wanted everyone to believe will be a potential head wind. With roughly $400 Million in sales by the end of this year, Price to sales of 12 is a much more realistic market cap. This could allow for some expansion if growth turns out to be a bit more robust in the next couple of quarters. Even at 12 times sales, you are still pricing in a lot of the future..... From my February post: For example, we bought SPLK at $31/share but I wouldn't buy it here at $90/share, even with the solid growth they've shown over the past 2 years. Trading at 35 times sales seems a bit excessive, even with their solid gross margins and revenue growth. Similarly, we purchased CRM the last time it fell below $40, but would certainly hesitate to pay $64, even if they are much more in line at 10 times sales.