Global Equities Research out with a piece on salesforce.com (CRM) questioning the revenue recognition of the well-publicized Merrill Lynch 25,000 seat deal signed in February 2007. According to the analyst, not a single Merrill employee was live in the system as of September 2008. He also talks about 10-15% of the base potentially downgrading from $65/mo to $9/mo service.
The Skew: No employee was live as of 6 months ago? What about now? There are about a dozen typos in his piece including my personal favorite, “CRM market to shrink by 3% - as Shit in Industry Structure are underway”. CRM is a very expensive software stock – its one of the only “cloud” pure-plays – their service is basically delivered entirely over the internet. As such, its controversial and either loved or hated as exhibited by its very high P/E and reasonably high short interest. No edge, just an out of the ordinary call on Global Equities Research’s part.
Piper upgrades Energy Conversion Devices (ENER) to a buy, using $2.95 in EPS for 2010. Yesterday ENER reported more stable gross margins than expected and threw out a very wide range of lowered guidance for the next couple of quarters. The company is expected to be a beneficiary of the Obama administration’s green stimulus initiatives but solar companies are likely to guide down for the next couple of weeks impacting near-term stock price.
The Skew: Spending money on solar projects during a potentially catastrophic economic crisis seems like a dubious use of taxpayer funds. So many of our taxpayer dollars are going towards investments with significant losses expected up front. Consumption is dropping significantly which should in turn reduce the noxious cloud of industry. The house is on fire, I wonder if we shouldn’t make sure we put it out before we start rewiring.
Dell (DELL) is offering 0% financing to small and medium businesses, according to the WSJ. Customers will be able to lease equipment for 3 years and optionally buy it for $1 at the end of the lease. Dell was previously offering 0% financing on certain equipment for large businesses.
The Skew: Hewlett Packard has been aggressively pushing at Dell’s market share and suggested they will continue to aggressively offer financing to customers during the downturn. Dell’s response is likely a symptom of HP’s inroads in the corporate market at Dell’s expense.