Salesforce.com (CRM) deserves to be up this much to an all-time high, perhaps even higher. Here's why.
The bears are forever saying that Oracle (ORCL), Microsoft (MSFT) and SAP (SAP) are going to crush Salesforce.com. That they have to. They are bigger, they offer a multi-suite of products instead of just customer-relations management and they have huge installed bases.
But not only is that not the case, Salesforce.com is taking their customers. As Salesforce wins large deal after large deal, including nine deals of an eight-figure size, these deals aren't just from scratch. CRM's getting huge companies to dump their current systems.
The naysayers have complained for ages about Salesforce's disclosures and accounting. I think that's nonsense. This company has more accounting transparency than any complicated company that I follow. It has a whole primer about how to understand its accounting and I understand that the SEC uses it as the benchmark of how to account for difficult-to-understand subscription accounting.
Meanwhile, let's not forget this company reached $1 billion, then $2 billion, then $3 billion in revenue at speeds I have never seen before. Sure, it is "overvalued" in the sense that it is a rich multiple on earnings. But the buyers of stocks like this are thrilled to pay these prices because this 30% growth simply isn't available from any other large-cap company.
Sure, one day Salesforce will stumble. I think it has to. But it sure hasn't yet, and this quarter simply made the bears -- like the relentless negativist at Bernstein -- look downright foolish.