February 5, 2009 - salesforce.com, inc. (CRM-NYSE) provides customer relationship management (CRM) service to businesses of various sizes and industries worldwide. The company also offers a technology platform for customers and developers to build and run business applications. It provides various Software-as-a-System CRM services, which enable customers and subscribers to systematically record, store, analyze, share, and act upon business data; and helps businesses to manage customer accounts, track sales leads, evaluate marketing campaigns, and provide post-sales service.

This stock took off at the beginning of this year, starting at $25.20 and stopped a little above $62 a share, up 146% in 10 months. Wish I had bought it, even if I paid $30 for it. But I didn't. The stock hit an all-time high last year at $75 in the spring before cratering to $20.82 in November of the same year. Glad I didn't buy it at $75. So with this great upward move, is all the good news already baked in? Maybe.

Second quarter results were mixed. Revenues were right about where analysts thought they would be but earnings were much better thanks to higher margined subscription and support revenues. Lower tax rates and cost cutting efforts also contributed. The bottom line was 17 cents a share, more than double the 8 cents of last year's second period. This quarter the consensus for the third period (ends in October, fiscal year ends January 31) is for 16 cents (29 analysts follow the company), exactly double the 8 cents of last year's third quarter. For the fourth, look for 15 cents, above the 11 cents of last year's fourth, but not quite as strong as the previous quarters' growth. For the full year, consensus is for 62 cents, then in 2011, 83 cents.

Research and Development (R&D) is the lifeblood of any technology driven company. To have strong R&D, you need techies. Techies cost money. CRM has plenty of that, $420 million in cash. Look for more new product offerings quarter after quarter. With themshould come continued earnings growth. For the last 5 years, earnings per share increased an average of 43% a year. Over the next 5, analysts see it "slowing" to 36% a year, on average. Not bad in a recession that comes close to a depression.

Of course, outstanding growth like this doesn't come cheap. The P/E ratio is in the stratosphere (115), though the Forward P/E is "only" 70. Price to Sales is an astronomical 6.23 while Price to Book hits the nose-bleed territory of 9.35. Benjamin Graham (and Warren Buffett) would never, could never, own this stock. Of course, Mr. Graham is dead and won't be buying any stock, but his approach to investing would have cut this off from his list of possibilities immediately. So this stock is only for the more adventurous.

More numbers: Market cap is $7.25 billion. Operating margin was 7.74% in the last 12 months. Profit margin was 5.35%. Return on equity was 9.36%. Cash per share is $3.39. Current ratio is .984. Book value per share is $6.38. Beta is 1.69. 52-week high was $65 on October 21, 2009. 52-week low was $20.82 on November 21, 2008. There are 124 million shares outstanding with a Float of 108.64 million. Insiders own 12.45%. There is no dividend.

CRM should appeal to many investors looking for a company that can grow in good times and bad. But when to buy it becomes the question. It's had a great run in the last 10 months, putting the valuations at extreme levels. More homework may give some investors comfort while it may create more anxiety for others. If this one fits your investing criteria, a lower entry point would seem warranted.

- Company Web site: www.salesforce.com

Ted Allrich