

SaaS stocks down 50% in 2008, but promising long-term prospects - arihelgason
http://www.mspmentor.net/2008/11/15/software-as-a-service-stocks-down-50-in-2008/#more-1234

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gaika
The fall in the shares in these companies has nothing to do with their
business.

The overall market is down more than 30%, and technology companies are a lot
more sensitive to the market direction than others. This is how Salesforce
looks adjusted for market trends: <http://whomovedmystock.com/CRM>
(disclaimer: this is my startup)

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zandorg
Nice site, pretty graphics and useful looking.

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markbao
In a somewhat unrelated note, has anyone seen Salesforce.com's (NYSE:CRM) P/E
ratio? <http://finance.google.com/finance?q=CRM>

P/E 98.02 and Forward P/E 319.20.

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bokonist
In a SaaS company the cost of sales is recognized immediately, but revenue is
only recognized one month at a time. The company might spend $3K on marketing
and sales to make $15K over the life time of the customer. The cost of sales
up front, while the revenue won't be recognized for months or years. Thus when
the company is in rapid growth phrase, earnings will be practically nothing,.
All cash is reinvested in sales & marketing, and the profits won't arrive
until growth starts to plateau.

Of course, sometimes it turns out that the sales and marketing expense is
actually more than the life time value of the customer. The company never gets
to profitability, and the share price tanks. This happened to Vonage.

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d0mine
Did you mean: "expense is actually _more_ " in the last paragraph?

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bokonist
Right, fixed now.

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1gor
>Part of NetSuite’s problem is timing. The company launched its IPO in
December 2007, a few months before Wall Street headed into its downward
spiral.

For the founders and VCs that was excellent IPO timing. IPO investors may
think otherwise.

