) reported decent third quarter 2012 results. The earnings guidance
is also decent, but cost increase may offset revenue growth to a
certain extent. We are concerned about continuous R&D
investments that would rationalize margins to some extent.
We find Chatter a key driver of Salesforce.com's enterprise license
agreements. We, however, caution investors about strong competition
in CRM application and cloud-computing areas. Google and Microsoft
are worthy of special mention, since they have been fighting to win
government clients at local, state and federal levels to use their
online e-mail and other applications that fit into the
Currently, we have an Underperform rating on the stock and set a
six-month target price of $108.00. This implies a downside risk of
8.7% from the current level.
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