This account is pending registration confirmation. Please click on the link within the confirmation email previously sent you to complete registration.
Need a new registration confirmation email? Click here
TheStreet Open House

Why Salesforce Will Soar in 2014

Stocks in this article: CRMORCLWDAY

NEW YORK (TheStreet) -- Salesforce.com (CRM) appears poised for a bright 2014 punctuated by large, enterprise deals and consistent customer retention. A string of strategic moves in 2013 have sowed the seeds for potential success in the coming year.

"I see tremendous runway ahead for ourselves, for our partners, and for our customers," Salesforce's vice president for Strategic Research Peter Coffee (pictured above) tells TheStreet during a recent interview highlighted in the next page.

Indeed, the upward trajectory of Salesforce's stock has the makings of a move higher next year even after having gained more than 25% in 2013. As Schaeffer's Investment Research's senior technical analyst Ryan Detrick explains (chart), after experiencing a breakout in late August, shares have spiked above previous peaks.

"This suggests the shares have a good deal of upward momentum," Detrick said, adding that Salesforce's "firmly" upward trending 200-day moving average indicates bulls are in on the chart. 

Underlying the bullish conviction is evidence of deal momentum. Oppenheimer analyst Brian Schwartz and Koji Ikeda's latest Salesforce customer survey polling 24 enterprises and 26 small to medium businesses at the 2013 annual Dreamforce conference indicates that 60% of the 50 customers sampled are predicting that their company will buy new Salesforce products in the next half year.

Also worth noting is that many of the large companies that looked to be leaning towards buying new Salesforce products also said they would like to expand seats with Salesforce, an indicator of continued customer satisfaction with the possibility of additional licensing revenues.

The poll showed that 71% of enterprise customers were looking to ramp-up their salesforce.com seat count in the next six months versus 67% in 2012. Of all customers surveyed, 72% would like to increase their Salesforce seat count, up from 66% in 2012.

Schwartz and Ikeda's report further revealed that a number of salesforce.com customers who are also customers of Oracle's Eloqua (ORCL) have been experiencing softening satisfaction in the Eloqua Marketing Cloud, creating opportunities for the company as contract renewal windows open.

Salesforce has found itself in the interesting position of being a cloud computing service leader that's also far from saturating the market. In some ways, the company has barely scratched the surface of the cloud computing market. Management recently revealed at the 2013 annual Dreamforce conference that about half of the Global 500 have yet to contract any salesforce.com product and less than 700 customers have been generating more than $1 million in annual recurring revenue for the company. This underscores  further potential in the enterprise space. As Salesforce's investments play out, the company estimates it will deliver its first $5 billion revenue year during fiscal 2015.

Top strategic moves laid down for 2014 during 2013 include visionary acquisitions, product transformations, and top hires. The company most recently bulked up its portfolio with the launch of Salesforce1, a mobile-based platform that combines its core offerings of Sales Cloud, Service Cloud and Marketing Cloud at a time when the mix of workloads running in the cloud is expected to triple over the next five years during this era of mobility, and on-premise workloads could decline more than 20 points. This is according to data based on Piper Jaffray analyst Mark Murphy's survey of 141 chief information officers responsible for more than $111 billion in IT spending budgets.

Meanwhile, Salesforce's summer buyout of Fortune 500 and small business-focused digital marketing software company ExactTarget continues to add to revenue growth. Other accomplishments of the year have included the hiring of software industry veterans such as former Oracle executives Keith Block and Anthony Fernicola to help drive global sales and large, enterprise deals. The company also expanded its upscale market exposure by more than tripling its independent software vendor partners to 900 this year, from the last.

"The extraordinary thing about the way we can engage with a customer even in the early stages is that we don't build a storyboard," Coffee said during the interview. "We don't build a prototype. We build a working application that if they like it, they could begin using immediately."

In next page, Salesforce's Peter Coffee talks strategy, including Salesforce1 and ExactTarget, for the year ahead.

1 of 2

Select the service that is right for you!

COMPARE ALL SERVICES
Action Alerts PLUS
Try it NOW

Jim Cramer and Stephanie Link actively manage a real portfolio and reveal their money management tactics while giving advanced notice before every trade.

Product Features:
  • $2.5+ million portfolio
  • Large-cap and dividend focus
  • Intraday trade alerts from Cramer
  • Weekly roundups
TheStreet Quant Ratings
Try it NOW
Only $49.95/yr

Access the tool that DOMINATES the Russell 2000 and the S&P 500.

Product Features:
  • Buy, hold, or sell recommendations for over 4,300 stocks
  • Unlimited research reports on your favorite stocks
  • A custom stock screener
  • Upgrade/downgrade alerts
Stocks Under $10
Try it NOW

David Peltier, uncovers low dollar stocks with extraordinary upside potential that are flying under Wall Street's radar.

Product Features:
  • Model portfolio
  • Stocks trading below $10
  • Intraday trade alerts
  • Weekly roundups
Dividend Stock Advisor
Try it NOW

Jim Cramer's protege, David Peltier, identifies the best of breed dividend stocks that will pay a reliable AND significant income stream.

Product Features:
  • Diversified model portfolio of dividend stocks
  • Alerts when market news affect the portfolio
  • Bi-weekly updates with exact steps to take - BUY, HOLD, SELL
Real Money Pro
Try it NOW

All of Real Money, plus 15 more of Wall Street's sharpest minds delivering actionable trading ideas, a comprehensive look at the market, and fundamental and technical analysis.

Product Features:
  • Real Money + Doug Kass Plus 15 more Wall Street Pros
  • Intraday commentary & news
  • Ultra-actionable trading ideas
Options Profits
Try it NOW

Our options trading pros provide daily market commentary and over 100 monthly option trading ideas and strategies to help you become a well-seasoned trader.

Product Features:
  • 100+ monthly options trading ideas
  • Actionable options commentary & news
  • Real-time trading community
  • Options TV
To begin commenting right away, you can log in below using your Disqus, Facebook, Twitter, OpenID or Yahoo login credentials. Alternatively, you can post a comment as a "guest" just by entering an email address. Your use of the commenting tool is subject to multiple terms of service/use and privacy policies - see here for more details.
Submit an article to us!
DOW 16,367.50 -12.91 -0.08%
S&P 500 1,899.07 +12.31 0.65%
NASDAQ 4,301.2010 +42.7630 1.00%

Brokerage Partners

Rates from Bankrate.com

  • Mortgage
  • Credit Cards
  • Auto

Free Newsletters from TheStreet

My Subscriptions:

After the Bell

Before the Bell

Booyah! Newsletter

Midday Bell

TheStreet Top 10 Stories

Winners & Losers

Register for Newsletters
Top Rated Stocks Top Rated Funds Top Rated ETFs