My Case Against salesforce.com, inc. (CRM)

Oracle’s CRM on Demand starts at $75 per month. And pricing isn’t the only edge that Microsoft has. Microsoft Dynamics CRM is integrated with Microsoft Outlook, the hugely popular email application, and Microsoft Office. And while Salesforce might have a lot of valuable applications, and might still have a more robust and popular CRM product than Microsoft, it doesn’t have Microsoft Office.

On its other front, Oracle is the largest provider of enterprise software (software for big companies) in the world. Its CRM product also integrates neatly and easily into its other systems. In addition, Oracle is a $144 billion gorilla which can buy its way into any sector via M&A activity with the cash it generates. It can easily take the CRM crown from Salesforce.com.

Valuation makes no sense

You can buy shares of Microsoft for a forward price-to-earnings of only 11x, and price-to-sales of 3.5x. You can also buy shares of Oracle for a forward price-to-earnings of only 9.8x and price-to-sales of 3.8x. Or, you can buy shares of the mighty salesforce.com, inc. (NYSE:CRM) for a hefty forward price-to-earnings of 66x and price-to-sales of 7.5x. I believe the right choice is very clear. Salesforce.com is incredibly expensive and lacks the proper future growth to support such an exuberant price tag.

Warning ahead

The market doesn’t believe it, but salesforce.com, inc. (NYSE:CRM) is a bubble only waiting to burst. Its growth has long stalled, it pays no dividends, and its competitors in the field are the ruthless, mostly large corporations out there. There’s not a single factor to support its unbelievably high valuation and price tag. Invest accordingly.

The article My Case Against Salesforce.com originally appeared on Fool.com and is written by Shmulik Karpf.

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