Salesforce.com Inc.CRM

Morningstar Rating

Stock Research and Analysis

by Sunit Gogia

Salesforce.com's on-demand customer relationship management (CRM) software has catapulted it into clear market leadership position among all providers of software as a service providers, but we are skeptical of the company's ability to reap large profits Read more

Bulls Say

Salesforce.com's leadership position in the on-demand delivery of CRM software makes it the vendor of choice for enterprises looking to cut IT costs.

Salesforce.com has spent years perfecting its hosted software model and has a significant lead on potential enterprise software rivals such as Oracle and SAP.

Increasing brand recognition should lead to lower subscriber acquisition costs, enabling the company to improve profitability as it grows.

Salesforce.com's hosted model is particularly attractive to the large SMB segment, which has historically been underserved by traditional enterprise software application vendors.

Apex and AppExchange enable customers to add functionality specific to their individual needs, thereby increasing the company's addressable market while boosting customer stickiness. Read more

Bears Say

Salesforce.com could be squeezed between competition from Oracle and SAP for large business customers and free alternatives like SugarCRM for SMB customers.

Salesforce.com's multitenant model makes it less customizable to a specific customer's needs, thereby reducing the platform's appeal.

Salesforce.com is encouraging customers to use Apex and build custom functionality that meets their needs, but the maintenance implications for such customer-specific functionality remain unclear.

The company's hosted platform is managed by third-party hosting companies, making Salesforce.com's core business performance dependent on factors beyond its immediate control.

The market for enterprise software as a service is young, and competition is likely to intensify as numerous competitors are entering the fray to partake of a portion of the potential profits. Read more

Strategy

Salesforce.com aims to increase market share by improving its products and aggressively marketing its services to domestic and international customers. The company is also attempting to attract a greater Read more

Management

Marc Benioff cofounded Salesforce.com and is CEO as well as chairman of the board. Benioff owns more than 15% of the company's outstanding equity and receives a nominal salary of $10 with no additional cash or equity compensation. We appreciate Benioff's Read more

Profile

Salesforce.com is the leading provider of hosted CRM software services. The company is expanding the breadth of its services and aims to be the world's first multiapplication, Read more

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