Dear Valued Visitor,

We have noticed that you are using an ad blocker software.

Although advertisements on the web pages may degrade your experience, our business certainly depends on them and we can only keep providing you high-quality research based articles as long as we can display ads on our pages.

To view this article, you can disable your ad blocker and refresh this page or simply login.

We only allow registered users to use ad blockers. You can sign up for free by clicking here or you can login if you are already a member.

salesforce.com, inc. (CRM), SAP AG (ADR) (SAP), Oracle Corporation (ORCL): Who Should You Choose?

Page 1 of 2

Salesforce.com (CRM)The CRM sector has been experiencing rapid growth as technology adoption continues to grow. According to an estimate by Gartner, the SaaS-based CRM sector could reach $7.9 billion in 2016, an annual growth of 15% from $3.9 billion in 2011. Since competition is also intensifying, the key is to identify what companies will be able to profit the most.

Let’s take a look at three big companies in the industry.

salesforce.com, inc. (NYSE:CRM): Solid revenue growth, but increasing loss margin and operating costs
salesforce.com, inc. (NYSE:CRM) is the market and technology leader in on-demand CRM applications and business services. The company has a strong market position that it enjoys from being a first mover in the industry and providing low ownership costs for its customers.

The company has exhibited solid revenue growth, as it grew to $835 million in Q4, a 32% increase from last year. On the other hand, operating expenses increased 34% compared to the same period last year, to $672.1 million. This is due to higher expenses primarily in R&D (50.3%), sales & marketing (33%), and administrative expenses (23%).

The company is spending to enter other promising markets and to develop new products. salesforce.com, inc. (NYSE:CRM)‘s acquisition of Rypple in February 2012 allows it to offer services to the SaaS-based human capital management market. Similarly, the company has a social collaboration application platform called Chatter.

In order to generate revenue growth, salesforce.com, inc. (NYSE:CRM) incurs heavy expenses on headcount additions, data center expansions, and strategic acquisitions. There is a risk that these increased investments turn into losses due to its relatively high customer acquisition costs. These investments are certainly necessary for long-term growth, but could put pressure in the coming quarters, affecting the company’s operating margins, currently at 3.6%.

SAP AG (ADR) (NYSE:SAP): Increasing working capital is putting pressure on operating cash flow

SAP AG (ADR) (NYSE:SAP) is the recognized leader in providing collaborative e-business solutions for all types of industries and for every major market.

The company reported total revenue of $4.95 billion for Q3 2012, a 16.4% increase from last year on a constant currency basis. EPS was $0.65, 2.3% less than the same quarter the year before on a constant currency basis.

Operating cash flow, which is one of its strongest points, increased 3.1% from last year to $4.35 billion year to date. On the other hand, cash and cash equivalents dropped 20% due to the recent acquisition of Ariba.

With more than 12,000 partners, SAP AG (ADR) (NYSE:SAP)’s unique open ecosystem strategy helps it add additional customer value across all their channels. I consider this well-oiled system its biggest asset, followed by its systematic approach to expand and market its business, which keeps new clients coming in.

Page 1 of 2
Loading Comments...