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Date Posted: 2/17/2010

Salesforce.com (CRM) Has Flawless Execution And Singular Goal Path; Makes It A Top Stock Pick For Global Equities Research, LLC.

 
 
67 WALL STREET, New York - February 17, 2010 - The Wall Street Transcript has just published its Internet Services Report offering a timely review of the sector to serious investors and industry executives. This 50 page feature contains expert industry commentary through in-depth interviews with public company CEOs, Equity Analysts and Money Managers. The full issue is available by calling (212) 952-7433 or via The Wall Street Transcript Online.

Topics covered: Virtualization And Implications For Growth Rates, Cloud Computing And The Displacement Of Legacy Providers, Assessment Of China Internet And China Telco Publicly Traded Companies, Profit Picture For Data Centers, Mobile Clouds, Mobile Business, Mobile Internet, Online Advertising And E Commerce Growth Impact, Rapid Expansion In Video Viewing

Companies include: China Real Estate Information Corp. (CRIC); AOL (AOL); AT&T (T); ActivIdentity (ACTI); Akamai (AKAM); Alibaba (1688.HK); Amazon (AMZN); Apple (AAPL); BMC (BMC); Baidu (BIDU); Blizzard Entertainment (ATVI); Blockbuster (BBI); Blue Coat (BCSI); CA (CA); Check Point (CHKP); China Mobile (CHL); Citrix (CTXS); CommVault (CVLT); Dells (DELL); and many more.

In the following brief excerpt from the 50 page report, Trip Chowdhry discusses the outlook for the IT Services sector and for investors.

Trip Chowdhry is the Co-Founder of Global Equities Research, LLC. He brings more than three years of sell-side analyst experience from FTN Midwest Securities, where he was the lead Analyst covering the IT Sector. Mr. Chowdhry also brings more than 16 years of industry experience having worked for Microsoft, CommerceNet, Sybase, Oracle and Amdahl (Fujitsu).

He has been quoted in The Wall Street Journal, Investor Business Daily, Barron's, CNN Money, Reuters, Associated Press, SmartMoney, TheStreet.com, Forbes and BusinessWeek. He has also made TV appearances on CNBC, Bloomberg TV and NDTV. Mr. Chowdhry has an MBA from Kellogg School of Management at Northwestern University and an M.S. in computer science from University of Southern California.

TWST: Please begin with a brief overview of your coverage universe, including the specific Internet services names you follow.

Mr. Chowdhry: I'm a Senior Analyst at Global Equities Research. We cover three sectors: IT services, software and Internet. In the Internet space, we cover Google (GOOG) and Yahoo! (YHOO). In IT services we cover Infosys (INFY), Wipro (WIT), Satyam (SAY), Mahindra (TECHM.NS), Cognizant (CTSH). And in the software space, we cover Oracle (ORCL), Red Hat (RHT), Sybase (SY), Adobe (ADBE), Salesforce.com (CRM) and VMware (VMW). We also cover hardware companies like HP (HPQ), Apple (AAPL) and IBM (IBM).

TWST: What sets these companies apart from the competition, and what do you expect to see from them post-recession? Why are they poised to be the winners?

Mr. Chowdhry: First, if you look at the IT budget. First, let me focus on the enterprise side only for now. If you look at the enterprise budget, almost 30% is spent on new projects and 70% is just spent on keeping the lights on, and that is to maintain the ongoing systems. And the 70% that I mentioned, almost 40% of that is wasted IT - that is, you're just trying to keep the systems, which have no relevancy in future. We have gone past the end of life, and they have lost their both economic value and their strategic value, but they continue to be in the system.

Why? Because either they are worried about their vendor retaliation, or they don't know what other alternatives may be present. So if you think about - the worldwide IT spend is about $1 trillion - hardware, software services, and then you think about 70% of that, that is $700 billion is being spent on keeping the lights on and 40% of that, which is what I call as wasted IT spend, which is about $280 billion, which is being just burned every year. That is the opportunity in which these companies I mentioned - Google, Microsoft, VMware, Salesforce.com and Sybase - are going to get their budgets from because they have new initiatives.

TWST: What are some of the successes and challenges Salesforce.com is experiencing at the moment?

Mr. Chowdhry: I think Salesforce.com has been ready. I would say their execution has been almost flawless. Their strategy is on a path of providing software as a service. They are what I call a "consumer-centric application company"; - that is, anything to do with consumer data, they do a very good job at it. So their strategy has been quite successful to move people away from Siebel, away from ACT!, away from Sage. So basically it is a combination of market share wins against Oracle's Siebel, against old companies, like ACT! and Sage, and then they have done their business.

And since Salesforce.com prices are, they have a very low price point, they are also benefiting from people who were using nontraditional mechanisms for customer relationship management, like Microsoft Excel, to convert them into a $9.99 product offering per month to use Salesforce.com. So if you see what Salesforce.com is benefiting from, I would say you could categorize it into three trends. First, as I mentioned before, an attack on wasteful IT spend, those $280 million I mentioned people are spending on wasteful IT. So that's one thing, which is going to benefit Salesforce.com.

TWST: When you consider both valuations and the outlook for these companies for 2010, which names would you say are the best buys at this point?

Mr. Chowdhry: I would say the best buys would be Google, even at these levels. I would say Sybase at these levels and VMware.

The Wall Street Transcript is a unique service for investors and industry researchers - providing fresh commentary and insight through verbatim interviews with CEOs and research analysts. This Special Issue is available by calling (212) 952-7433 or via The Wall Street Transcript Online .

The Wall Street Transcript does not endorse the views of any interviewees nor does it make stock recommendations.
 
 


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