Will Salesforce.com Continue to Deteriorate?

“We think that the fundamentals of Salesforce.com is only going to deteriorate moving forward,” says Global Equities Research. Outspoken analyst Trip Chowdhry sent out an e-mail this morning regarding Salesforce.com CRM following a recent keynote at Oracle World with Larry Ellison. “Key Message: Salesforce.com['s] industry structure has changed – revenue growth may slowdown for Salesforce.com, expenses may rise, which may lead to multiple compression,” Chowdhry, who is the Managing Director of Equity Research, wrote. “The best for CRM is probably over; incrementally getting negative on Salesforce.com stock.” Chowdhry says that early indications are that Oracle, “with the launch of Public Cloud, has altered the industry structure and it will have the following impact on Salesforce.com: “Salesforce.com win rates will dramatically decline vs. Oracle, thereby impacting Salesforce.com revenue growth going forward. “Salesforce.com expenses will also increase. R&D, Sales and Marketing will all have to increase as the result of competition from Oracle. This will impact margins. “Salesforce.com stock is priced for perfection; and Oracle has introduced serious competition to Salesforce.com; multiple contraction on Salesforce.com – cannot be ignored. “After talking to no less than 150 people today, after the keynote, we think that the fundamentals of Salesforce.com [are] only going to deteriorate moving forward. After we do some more research, we may revisit our rating, estimates and price target on Salesforce.com.” Other analysts have had a different take on Salesforce. As of September 22, Jefferies still maintained its Buy rating and $156 price target. Just a few days prior, Goldman Sachs reiterated its Buy rating and $150 target on the stock. Late last month, Salesforce announced that it had acquired Assistly, which is described as an “instant customer-service help desk” built for the cloud. Follow me @LouisBedigian