salesforce.com, inc. (CRM) Continues With its Massive Outperformance

salesforce.com, inc. (NYSE:CRM) released its second quarter earnings report yesterday, which was yet again better than the Street’s expectations. The company’s results though are impressive, but many eyebrows are raising over the amount it has paid for its recent acquisitions. Pat Walravens, Senior Analyst at JMP securities, discussed salesforce.com, inc. (CRM) ‘s earnings, hiring freeze and acquisitions with Cory Johnson on Bloomberg.

salesforce.com, inc. (NYSE:CRM)

According to Walravens even though salesforce.com, inc. (NYSE:CRM) spent too much on its acquisitions, when one has a $5 billion company that’s growing at 38% and generates a free cashflow of $200 million, there is not much that one can complain regarding them. Johnson feels that  salesforce.com, inc. (NYSE:CRM) declining gross margins and the amount that it paid for recent acquisitions are a cause of concern for the company.

“There are groups, where they have either been told to slow down their hiring or not to hire or not to replace an existing person, when they leave or they can extend offers, but the people can’t start until October, November, December. So, I think, they are starting to show a little bit of discipline around. [...] In 18 months they have gone from 10,000 to 15,000 employees,” Walravens said.

Johnson mentioned that salesforce.com, inc. (NYSE:CRM) is interested in getting into different verticals of software as a service (SaaS), which might affect other SaaS companies. Walravens agreed with that and added that for salesforce.com, inc. (NYSE:CRM) to grow even further, it needs to venture into other verticals.

“I think you are going to see an analytics product, something that helps people get more insights into what they are actually doing and, I think, that’s part of the reason they made that acquisition,” Walravens added.

When Johnson stated that salesforce.com, inc. (NYSE:CRM) has already got an analytics product, Walravens responded by saying that their existing analytics product is not that good and salesforce.com, inc. (NYSE:CRM) has to improve on that front.

Disclosure: None

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