CRM: What To Watch For on Thursday

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Richard Davis and David Evanson

Forbes.com, Spring, 2012

Canaccord Genuity technology analyst Richard Davis said he believes Salesforce.com (CRM) shares “could jump 3-8% on Friday following what we expect will be a bullish print and improving investor sentiment about growth stocks due to 1) at least temporary exhaustion of risk-off selling of high valuation growth stocks, and 2) a positive halo effect from a successful Facebook IPO.”

He noted four things to watch for on the Thursday night print:

Revenues and FCF/share. Results above our $677 million (+34%) and $1.03 estimates on a 38% tax rate would be bullish (we’re looking for non-GAAP EPS of $0.34).

A normalized calculated billings growth rate >30%. The question on everyone’s mind is whether a solid Q4 drained deals from the forthcoming April quarter or the macro economy worsened. We don’t believe so in either case.

Qualitative discussions of the world economy. This will be a verbal “body language” moment for CEO Benioff as investors will try to intuit incremental fear or confidence in outlook.

And something we’d like to hear. In our view, unless Force.com becomes a meaningful development platform it will be difficult, but not impossible, for Salesforce to reach the $10 billion revenue pot of gold on the 4-5 year hill in the distance.