Monday, December 5, 2011

A Look At Cloud Software Stocks in Light of SuccessFactor's Buyout

Considering the 52% premium that SuccessFactors (SFSF) received from SAP this weekend, it made us wonder if any other cloud software stocks were worth looking into.

Generally the stocks claiming the 'cloud software' tag have lacked the profitability to warrant further research considering the normally lofty valuations. The summer sell-off and continued growth in the sector has made some valuations more compelling, especially considering the SAP offer premium.

Remember that SFSF had massive 78% revenue growth in Q3, but the company only managed to report non-GAAP income of $8.6M. Based on $95M in quarterly revenue, that is a decent profit margin. Unfortunately though the company is a big issuer of shares for compensation so that the outstanding shares crept up to 87M from 81.6M.


Read the full article at Seeking Alpha.


Disclosure: No positions mentioned. Please review the disclaimer page for more details. 


No comments: