Company Annual Update
Report by Donjanea Williams
September 15, 2013
Company 1: Sales Force (CRM)
COMPANY PROFILE
Salesforce.com, inc. provides customer and collaboration relationship management (CRM)
services to various businesses and industries worldwide. It also offers a technology platform for
customers and developers to build and run business applications. The company’s Salesforce
CRM services enable customers and subscribers to record, store, analyze, share, and act upon
business data, and to help businesses manage customer accounts, track sales leads, evaluate
marketing campaigns, and provide post-sales service. It markets sales force automation features
of its application services under the Sales Cloud brand name; and customer service and support
automation features under the Service Cloud brand name. The company also provides various
collaboration cloud products, such as Chatter, Chatter Plus, Chatter Mobile, Chatter Free, and
Chatter.com that provide a private and secure corporate social network for companies of various
sizes. In addition, it markets Force.com, a cloud computing platform under the Custom Cloud
brand name that enables customers and developers to build complementary applications; and
AppExchange, an online directory that provides customers to browse, test-drive, share, and
install applications developed on Force.com platform. Further, the company offers professional
services comprising consulting, implementation, and training services. salesforce.com, inc.
markets its services primarily through its direct sales, and referral and indirect sales. The
company was founded in 1999 and is based in San Francisco, California.
CURRENT STOCK DATA
Price: $49.64 (198.56), which is down from $.32 at market open Friday
Day's Range:
52wk Range:
Volume:
Avg Vol (3m):
Market Cap:
P/E (ttm):
49.18 - 50.09
34.76 - 50.60 (139.04202.40)
3,351,870
5,341,230
29.59B
NA
EPS (ttm):
Div & Yield:
1y Target Est:
-0.41
N/A (N/A)
51.54
COMPANY DATA
2013 Company Finances
Points to consider:
 Is the annual pre-tax profit margin and return on equity 17% or more? No



Also, notice the percentages of profit margin, operating margin? Profit margin and
operating margin is in the red while revenue is growing.
|
Does the company have 6-12 quarters of strong sales and growth and has that growth
continued to increase? Are the numbers at their peak over the past quarters? Company
has strong sales growth, but decreasing profits.
Review company’s debt ratio – is the debt more than equity (company cash/assets)? Yes,
the company has a high debt/equity ratio.
FINANCIAL HIGHLIGHTS
Financial Highlights
Financial Highlights
Fiscal Year
Fiscal Year Ends:
Jan 31
Most Recent Quarter (mrq):
Jul 31, 2013
Profitability
Profit Margin (ttm):
-6.69%
Operating Margin (ttm):
-4.59%
Management Effectiveness
Return on Assets (ttm):
-1.60%
Return on Equity (ttm):
-9.86%
Income Statement
Revenue (ttm):
3.47B
Revenue Per Share (ttm):
5.96
Qtrly Revenue Growth (yoy):
30.80%
Gross Profit (ttm):
2.37B
EBITDA (ttm)6:
72.43M
Net Income Avl to Common (ttm):
-232.26M
Diluted EPS (ttm):
-0.41
Qtrly Earnings Growth (yoy):
N/A
Balance Sheet
Total Cash (mrq):
623.49M
Total Cash Per Share (mrq):
1.05
Total Debt (mrq):
2.44B
Total Debt/Equity (mrq):
86.56
Current Ratio (mrq):
0.55
Book Value Per Share (mrq):
4.73
Cash Flow Statement
Operating Cash Flow (ttm):
853.86M
Levered Free Cash Flow (ttm):
879.16M
EARNINGS AND SALES HISTORY
Note: Looking for company’s quarterly earnings per share to be up at least 25% and percentages
increases in profits/revenue higher than in past quarter.
Earnings Per Share - Quarterly Results
1st
FY (01/14)
FY (01/13)
FY (01/12)
($0.12)
($0.04)
$0.00
$0.12
($0.02)
($0.01)
NA
($0.39)
($0.01)
Qtr
2nd
Qtr
3rd
Qtr
4th
NA
($0.04)
($0.01)
$0.00
($0.48)
($0.02)
Qtr
Total
Qtr. Over Qtr. Eps Growth Rate
FY (01/14)
FY (01/13)
FY (01/12)
-243 %
-367 %
-100 %
200 %
50 %
NA
NA
-2,114 %
0%
NA
91 %
0%
1st
Qtr
2nd
Qtr
3rd
Qtr
4th
Qtr
Yr. Over yr. Eps growth rate
FY (01/14) FY (01/13) FY (01/12)
1st Qtr
-243 %
NA
NA
2nd Qtr
786 %
-133 %
-127 %
3rd Qtr
NA
-5,067 %
-120 %
Revenue - quarterly results (in millions)
FY (01/13) FY (01/12) FY (01/11)
1st Qtr 695
504
376
2nd Qtr 731
546
394
3rd Qtr NA
584
429
4th Qtr NA
631
456
Total $1,426
$2,265
$1,655
COMPANY FINANCIAL SHEET
Income Statement
Points to Consider

Does company have history of significant earnings increases? Revenue has increased.

Does the company have an annual earnings growth of 30% or more? Revenue has
increased by more than 25%, but not 30%.

Check income statement to see if the gross profit and various incomes are
improving/increasing. Revenue and profit has increased while income has decreased over
the past three years.
Revenue
$ 3,050.2B – Jan 2013
$ 2,266.5B – Jan 2012
$ 1,657.1– Jan 2011
Profit
$2366.6B – Jan. 2013
$1,777.7B– Jan. 2012
$1333.3B – Jan. 2010
Operating Income (loss from more operating expenses such as research costs)
$-110.7M - Jan. 2013
$-35.1M - Jan. 2012
$97.5 – Jan. 2011
Net Income
-$270.40M – Jan. 2013
$11.6M – Jan. 2012
$64.5 – Jan. 2011
Balance Sheet
Check the balance sheet to see if the company’s total assets are increasing or not and liability
decreasing

Total assets increasing and current assets increased between 2011 and 2013, but decrease
in deferred not current assets and pre-paid assets non- current and deferred costs

Current and total liability increasing a higher amount over past three years due to increase
in debt – both current and long term.
Cash Flow Statement
Check the cash flow sheet to determine if the company is generating money and has a growing
cash reserve

Increased cash from operating activities, but decreased net income

Decreased cash flow from investments, but increased cash from financing activities such
as purchase of stock and investments

Free cash flow increased over last three years
COMPANY VS INDUSTRY
Questions to Consider: Is the stock part of a historically winning industry group?
Yes. See industry performance below.
Industry: Application Software
Industry Performance
ndustry Statistics
Market Capitalization:
Price / Earnings:
Price / Book:
Net Profit Margin (mrq):
Price To Free Cash Flow (mrq):
Return on Equity:
Total Debt / Equity:
Dividend Yield:
25.3
26.5
16.6%
41.9
17.4%
46.7
1.2%
CRM vs Industry
Top Application Software Companies by Market Cap
Company
Symbol
Price
Change
Market Cap
P/E
Oracle Corporation
ORCL
32.46
1.01%
150.32B
14.36
SAP AG
SAP
72.64
1.17%
86.62B
22.63
Salesforce.com, Inc
CRM
49.64
0.64%
29.59B
N/A
Adobe Systems Inc.
ADBE
47.76
0.25%
23.99B
42.45
Intuit Inc.
INTU
65.95
0.76%
19.65B
23.25
Workday, Inc.
WDAY
76.84
0.55%
13.32B
N/A
CRM vs. Industry Leaders
CRM vs. Industry Leaders
Statistic
Industry Leader
Market Capitalization
ORCL
P/E Ratio (ttm)
SPSC
PEG Ratio (ttm, 5 yr expected)
AGYS
CRM
CRM Rank
150.32B
29.59B
3 / 148
966.00
N/A
N/A
8.00
5.26
4 / 148
Revenue Growth (Qtrly YoY)
LIQD
752.10%
30.80%
23 / 148
EPS Growth (Qtrly YoY)
OTEX
441.80%
N/A
N/A
Long-Term Growth Rate (5 yr)
CSOD
50.00%
27.77%
11 / 148
Return on Equity (ttm)
CDNS
59.72%
-9.86%
67 / 148
86.558
N/A
N/A
N/A
Long-Term Debt/Equity (mrq)
Dividend Yield (annual)
AMSWA
5.00%
STOCK DATA REPORT FROM MSN MONEY
STOCK SCOUTER
Salesforce.com Inc, a large-cap growth company in the technology sector, is expected
to match the market over the next six months with average risk.
Stock Pro(s)
The price-to-sales multiple is significantly higher than the average for all stocks in the
StockScouter universe. Very positive for a medium- to large-sized company like CRM
Previous day's closing price for CRM was significantly above its 50-day moving average. Very
positive
Stock Con(s)
Shares are being heavily sold by financial institutions. Neutral for a large company like CRM
The StockScouter measure of relative price change and consistency is flat. Neutral
INSTITUTIONAL OWNERSHIP
Questions to Consider:

Does the company’s management own stock or are they selling the stock lately?
Two people in management has sold some stock lately according to news report. See
information on this news later in the report later

Has one or two of the smarter, better performing mutual funds bought the stock?
Yes. This stock is owned by: Price (T.Rowe) Associates Inc; Vanguard Group, Inc.
(The); Fidelity Growth Company Fund and Fidelity Contrafund Inc.

What’s it institution ownership (want 80% or better)?
100% ownership
OWNERSHIP INFORMATION
% of Shares Held by All Insider and 5% Owners:
32%
% of Shares Held by Institutional & Mutual Fund Owners: 100%
% of Float Held by Institutional & Mutual Fund Owners: 146%
Number of Institutions Holding Shares:
530
Companies included in holdings - Price (T.Rowe) Associates Inc; Vanguard Group, Inc.
(The); Fidelity Growth Company Fund and Fidelity Contrafund Inc
TRADING INFORMATION
Questions to Consider:

Is the stock’s daily volume a lot higher than the 13 week? This means something might
be going on, either its price is going to rise or people are ditching it and its falling.
No. The stock is not trading higher than 3 month volume.

Is the stock in a quality price range (>$15.00)? but look at PE info compared to
industry
Yes. The stock is trading at more than $15.00. PE for company is unknown according
to Yahoo at this time.
STOCK CHART TREND
Is the instability in the yearly price chart? Yes. The price has fluctuated significantly over the
past year. Please note the stock had a 4:1 split in April 2013.
CRM NEWS UPDATE
“Cramer Is Wrong: The salesforce.com Stock Split Is Meaningless”
Article Summary
Recently, CNBC commentator Jim Cramer took to the air to declare that stock splits matter, and
that, in particular, salesforce.com's (NYSE: CRM ) plan to split 4-for-1 on April 18 could send
the shares higher. He's wrong, says Tim Beyers of Motley Fool Rule Breakers and Motley Fool
Supernova in the following video. The Salesforce stock split will only help those who don't fully
understand the value of the underlying business. Management, meanwhile, says it wants to split
Salesforce stock in order to increase liquidity for issuing equity options to employees (which it
already does, in bulk).
“Salesforce.com Sells 149K Shares and 4 Insider Sales to Note”
Article Summary
Van Veenendaal Frank who is Vice Chairman at Salesforce.com (NYSE:CRM), sold 149,000
shares at $50.09 per share for a total value of $7,463,052. The shares recently traded at
$49.96,down $0.13, or 0.26% since the insider sale.
Martinez Maria who is EVP, Customers for Life & CGO at Salesforce.com (NYSE:CRM), sold
41,500 shares at $49.78 per share for a total value of $2,065,891. The shares recently traded at
$49.96, up $0.18, or 0.36% since the insider sale
“Salesforce.com Appoints Two New Members to its Board of Directors”
Article Summary
SAN FRANCISCO, Sept.12, 2013 /PRNewswire/ -- Salesforce.com (CRM), the world's #1
CRM platform (http://www.salesforce.com/), announced today the appointments of John V.
Roos, former U.S. Ambassador to Japan, and Robin Washington, CFO of Gilead Sciences, to its
Board of Directors. Salesforce.com also announced that Stratton Sclavos, former president and
CEO of VeriSign, and Shirley Young, former corporate VP of General Motors, have departed
from the company's Board of Directors. All changes to salesforce.com's board were effective as
of September 10, 2013.
“Salesforce, Big Lots, PacSun are big market movers” – August 30
Article Summary
NEW YORK (AP) -- Stocks that moved substantially or traded heavily Friday on the New York
Stock Exchange and the Nasdaq Stock Market: Salesforce.com Inc., up $5.48 at $49.13
Thanks to increasing demand for its software, the cloud computing company reported secondquarter results that beat expectations.
“Small companies power ahead with big gains”
Article Summary
Higher growth rates make some small companies tempting acquisitions for larger rivals, who can
boost their revenue growth by absorbing them. Many of the big gainers in the Russell this year
are acquisition targets. The reason? Big companies often pay a premium to acquire a company.
When investors think a deal may be coming, their buying boosts a small company's stock price.
In June, Salesforce.com, a cloud computing company, agreed to buy ExactTarget, a digital
marketer similar to Responsys, in a $2.5 billion deal. Salesforce paid $33.75 for ExactTarget's
outstanding stock, a premium of more than 50 percent. ExactTarget's stock had climbed $3.09, or
16 percent, to $22.10 in the five weeks before the Salesforce bid was announced.
“Salesforce.com Launches New Salesforce Chatter Mobile--Helping Employees Make Every
Moment Count”
Article Summary
SAN FRANCISCO, July 23, 2013 /PRNewswire/ -- Salesforce.com [NYSE: CRM], the world's
#1 CRM platform, today launched the new Salesforce Chatter Mobile, helping employees make
every moment count. With the fourth generation of Chatter Mobile, employees will be able to
edit records, view dashboards and take any business action. New actions in Chatter Mobile are
fully customizable and allow companies to extend custom business processes to make mobile
employees more productive in every micro-moment. More than 100,000 customer companies,
such as Brown-Forman, Design Within Reach, Kelly Services and Vodafone Australia, will use
every moment to sell, service, market and more in entirely new ways.
“Salesforce.com: Wall Street Darling or Dog?”
Article Summary
Salesforce.com (NASDAQ:CRM) is turning heads, thanks to the stock’s meteoric rise of more
than 400 percent since 2009. The stock is surrounded by controversy — the bulls tout
Salesforce.com’s high revenue growth and industry-leading IT services, while bears fire back,
arguing that the company will never be profitable. Let’s use our CHEAT SHEET investing
framework to cut through the noise, and decide whether Salesforce.com is an OUTPERFORM,
WAIT AND SEE, or STAY AWAY.
C = Catalysts for the Stock’s Growth
Gartner (NASDAQ:IT) — an advisory firm that reviews IT services — recently evaluated
Salesforce.com’s Sales Cloud and Service Cloud as industry leaders. To anyone who works
closely with these types of systems, Salesforce.com’s high ratings should come as no surprise. In
fact, the company has achieved Gartner’s coveted “leader” rating in each of the last seven years.
Its dominant position in the rapidly growing cloud computing industry has led to revenue growth
of more than 30 percent this year.
However, the market had trouble digesting Salesforce.com’s recent acquisition of digital
marketing company, ExactTarget, for $2.5 billion. Salesforce.com acquired ExactTarget for a
more than 50 percent premium. CEO Marc Benioff implied that through the acquisition, the
company is working to establish a dominant presence in the quickly developing world of digital
marketing. With an impressive client roster, and strong cloud marketing systems already in
place, ExactTarget seems like a valuable acquisition. However, considering that ExactTarget has
not been profitable since 2008, $2.5 billion seems like a lot to pay for a company that generated
just $300 million in sales last year.
E = Earnings Per Share are Decreasing Year-over-year
Salesforce.com’s GAAP income trend is scary. Not only is the company’s net income decreasing
every year, but the rate at which it’s shrinking is also increasing. Salesforce.com’s revenue
picture is much better — sales have increased at a healthy rate in the last three years. The
company’s profit margins are struggling because of high marketing and sales costs, which
amounted to more than 50 percent of total revenue and $115 million in stock-based
compensation expenses last quarter.
Salesforce.com’s accounting conventions are aggressive, to say the least. When reviewing
Salesforce.com’s financials, it’s important to distinguish between GAAP and non-GAAP
earnings. Salesforce.com does not report stock-based compensation, which accounts for a large
part of its expenses, in its GAAP earnings. The company’s expects to report another net loss in
its 2014 fiscal year, of earnings per share between -$0.33 and -$0.31.
T = Technicals on the Stock Chart are Mixed
Salesforce.com is currently trading around $42.31, above both its 200-day moving average of
$42.13, and its 50-day moving average of $39.13. The stock was up 32.7 percent in the last 12
months — performing slightly better than the S&P 500, which was up 26.7 percent.
There are two red flags from a technical perspective, though. First, there was the occurrence of a
“death cross” — where the 200-day moving average crosses over the 50-day moving average —
at the beginning of the month. This generally implies investor sentiment is changing for the
worse. Second, is the amount of short interest for the stock — short sellers hold a massive 87.2
percent of the shares outstanding.
Conclusion
Salesforce.com has captained the development of the cloud computing industry. The company
continues to report high revenue, and has made several key acquisitions in expanding its digital
marketing business.
However, it is unrealistic that Salesforce.com will continue to enjoy such a high growth rate.
While late to the party, tech giants Microsoft (NASDAQ:MSFT), Oracle (NYSE:ORCL), SAS,
and IBM(NYSE:IBM) have all established a presence in the cloud computing scene in the last
several years, intensifying competition for Salesforce.com’s products.
Salesforce.com’s growth strategy has recently focused less on innovation, and more on
acquisition: a more expensive tactic that is clearly not helping the company’s bottom line. With a
forward price to equity multiple of 75.25, Salesforce.com is relatively expensive to boot. If the
company can significantly improve its profit margins, while continuing to generate stable
revenues, Salesforce.com might be a buy. For now, it looks a lot more like an ill-fated stock
during the dot-com bubble. Salesforce.com is a STAY AWAY.
Company 2: American Europacific
PROFILE
Current Price: $45.30 ($6.41 increase from November 2012 of 38.81)
Total Assets: $107.9 bil as opposed to $100B in November 2012
Turnover: 27% (how often fund manager sells stocks in mutual fund in a given year)
Category: Foreign Large Blend
Investment Style: Large Growth
PERFORMANCE RETURNS
YTD
Growth of 10,000
1 Mo
1 Yr
3 Yr *
5 Yr *
10 Yr *
10,990
10,14611,510
12,377
13,070
24,357
9.90
1.46 15.10
7.37
5.50
9.31
+/- MSCI EAFE NR
USD
-4.02
-0.03 -4.98
-1.36
1.48
1.54
+/- Category
-1.13
0.32 -0.95
-0.25
1.74
1.89
Fund
% Rank in Cat
# of Funds in Cat
66
25
62
62
17
12
822
856
796
702
622
322
* Annualized returns.
Data as of 09/13/2013. Currency is displayed in USD.
MORNINGSTAR RISK & RATING STATISTICS
AEPGX
08/31/2013
3-Year
5-Year
10-Year
Overall
Rating, risk, and return values are relative to each fund’s Morningstar
Category. Click here to see our methodology.
Morningstar Return
AEPGX
Below Average Average
Above Average Average
Morningstar Risk
AEPGX
Below Average Below Average Below Average Below Average
Morningstar Rating
AEPGX
# of Funds in
Category
703
618
322
UPSIDE & DOWNSIDE CAPTURE RATIO
AEPGX
1-Year
3-Year
5-Year
10-Year
15-Year
All ratios calculated vs. MSCI EAFE NR USD. View our glossary definition here.
08/31/2013
AEPGX
80.96
87.68
87.65
89.29
95.22
90.03
98.81
91.59
101.79
88.92
Category: FB
88.94
97.26
93.69
95.59
98.51
99.85
98.83
101.59
99.65
101.56
Note: Upside capture ratio over 100 indicates a fund has generally outperformed the benchmark
during periods of positive returns for the benchmark. Meanwhile, a downside capture ratio of
less than 100 indicates that a fund has lost less than its benchmark in periods when the
benchmark has been in the red.