Market Mad House

In individuals, insanity is rare; but in groups, parties, nations and epochs, it is the rule. Friedrich Nietzsche

The Death Spiral

How Much Money is making?

I conclude (NYSE: CRM) is a cash-rich software value investment that Mr. Market overprices.

To explain, Salesforce shares were trading at $158.28 on 30 October 2019. In addition, Salesforce had $3.51 billion in short-term investments and $2.532 billion in cash and equivalents on 31 July 2019. Consequently had $6.042 billion in liquid assets.

However, Oracle Corp (NYSE: ORC) had $31.083 billion in cash and equivalents and $4.621 billion in short term-investments on 31 August 2019. Hence, Oracle had $35.704 billion in liquid assets but its shares were trading at $54.85 on 30 October 2019.

Therefore, I consider overpriced because its cash and margin of safety are too low. To explain, I think $6.042 billion in cash is too low a margin of safety when a direct competitor; Oracle, has $35.704 billion in the bank.

An even greater menace is Microsoft (NASDAQ: MSFT) which had $136.636 billion in cash and equivalents on 30 September 2019. I think Mr. Market fairly priced Microsoft at $144.61 on 30 October 2019.

Salesforce has a lot of Value

However, I think still has a lot of value because of its ecosystem.

For example, had 19.6% of the customer relationship management (CRM) software market on 29 May 2018, Department of Numbers estimates. For non-salespeople, CRM is the software that connects businesses to customers. Hence, CRM is critical to the success of many businesses.

In addition, is a major player in the cloud business. Department of Numbers estimates 34% of Salesforce’s revenue came from its Sales Cloud solution in May 2018. In addition, the Service Cloud generated 30% of Salesforce’s revenues came from the Service Cloud and 21% came from the App cloud in May 2018.

Does Microsoft Own the Business Cloud?

Therefore, I estimate 85% of Salesforce’s revenue came from the Clouds in May 2018. Consequently, I think the cloud dependence makes Microsoft the biggest threat to

For instance, the revenue from Microsoft’s Azure Cloud Intelligent Cloud grew by 27% in the quarter ending on 31 September 2019, TechCrunch estimates.  In addition, revenue from Microsoft’s Azure cloud solution grew by 59% in the same period.

However, trends in the business favor both Microsoft and For instance, the infrastructure as a service (IaaS) cloud grew by 31.3% in 2018, Gartner estimates. Gartner names Microsoft as the number two vendor in the market after Amazon (NASDAQ: AMZN).

Could Competitors squeeze out of the Cloud?

In addition, Gartner estimates the top five IaaS providers; Amazon, Microsoft, Alibaba (NYSE: BABA), Alphabet (NASDAQ: GOOG), and IBM (NYSE: IBM), accounted for 77% of the 2018 global IaaS market. However, I think there is room for smaller vendors.

Unfortunately, smaller vendors will need to be far more competitive. Gartner estimates the Top Five IaaS vendor’s share grew from 73% in 2017 to 77% in 2018. Hence, the Big Five could squeeze smaller players like and Oracle out of the cloud market.

In 2018, Gartner estimates Amazon’s share of the public IaaS cloud market grew by 26.8%, Alibaba’s share of the public IaaS market grew by 92.6%, Microsoft’s share of the IaaS market grew by 60.9%, Alphabet’s (NASDAQ: GOOGL) public IaaS cloud share grew by 60.2%, and IBM’s IaaS public share grew by 24.7%.

Meanwhile, all other providers combined had a growth rate of 11.1% in 2018. In particular, I have to wonder how can compete with companies such as Alphabet; Google, which had $121.056 billion in cash and short-term investments on 30 June 2019.

Is making Money?

Contrarians; however, will say (NYSE: CRM) is a value investment because it makes money in the face of all that competition. Yet, is an obscure company most people have never heard of.

Notably, reported a gross profit of $3.03 billion on revenues of $3.997 billion on 31 July 2019. Importantly, reported a revenue growth rate of 21.82% on 31 July 2019.

However, reported an operating income of $55 million and a net income of $91 million on 31 July 2019. Hence, makes some money from its growing business.

The Risk at

In addition, reports an operating cash flow of $436 million and a free cash flow of $258 million on 31 July 2019. Thus,’s business makes some money, but it is not a money machine like Oracle, Alphabet, or Microsoft.

Therefore, you could a serious risk by buying (NYSE: CRM). This stock has a low of margin of safety and Mr. Market overprices it.

In addition, reports Salesforce pays no dividend. Hence, CRM is not a good stock for average people. In contrast, Microsoft plans a 51₵ dividend for 20 November 2019 and Oracle paid a 24₵ dividend on 9 October 2019.

In conclusion, I think there are better cloud and software stocks than out there. I believe the high price and lack of a dividend make CRM a poor investment.