Out Fox The $treet

Any investor reviewing the financials of NetSuite ( NYSE: N     ) , the cloud-software based Enterprise Resource Planning (ERP) company, would probably derive a stock value below $30 rather quickly. Most investors would be shocked that the stock trades at nearly $110. The company is growing quickly as enterprises move toward cloud offerings, but NetSuite is only marginally profitable and revenue growth is slowing down to a more sustainable 25% long-term growth rate. Why then are investors willing to pay $8 billion for a stock only generating $400 million in revenue? Read the full article here . Disclosure: No positions mentioned. Please review the disclaimer page for more details. 

Historical research from Schaeffer’s shows that stocks entering the Nasdaq-100 shouldn’t be bought at that point. Typically the best stock to buy is the one leaving an index such as the Nasdaq-100. In the normal scenario, a company that leaves such a big index has faced a couple of weak years and the exclusion from the list places extra pressure on the stock. In essence, a catalyst that more » Disclosure: No positions mentioned. Please review the disclaimer page for more details. 

After the close on Wednesday, Mellanox Technologies, Ltd. (MLNX) reported quarterly numbers that sent the stock soaring as much as 50% after hours. A very incredible and unheard of move for a stock with a $2.7B market cap. A move typically only reserved for FDA approvals on biotech stocks or buyouts. Mellanox is a leading supplier of end-to-end interconnect solutions for servers and storage systems. The company claims to have benefited from growth in the HPC, Web 2.0, storage, database, cloud, Big Data, and financial services market. Basically every part of tech that is hot except maybe that last one. Read the full article at Seeking Alpha. Disclosure: No positions mentioned. Please review the disclaimer page for more details. 

Though missing earnings and revenue estimates, Oracle (ORCL) announced an additional $5B stock buyback program. Unfortunately the earnings report lacks details on the Q112 details regarding stock buybacks. Having a model that focuses on Net Payout Yields (NPY), combination of net stock buybacks and dividends, these headlines naturally grab our attention for future additions to the model. Considering ORCL has a roughly $150B market cap, a $5B stock buyback is not likely to make the top of the list. The small dividend doesn't help much either. This isn't that surprising as most of the large tech companies have piles of cash and strong earnings, but most of them like CSCO and MSFT still only have NPY yields in the 5-6% range. The companies are cheap on the payouts or the market caps are too expensive to get top yields. Below is a chart with the NPYs from the last 5 quarters. Note how the net stock buyback has been rather pathetic until the prior quarter:   ...

When reading through the recent Salesforce.com (CRM) Dreamforce Analyst Session presentation (obtain from the upper right hand corner box), a reader should be constantly struck by the desire to grow at all costs. Both Sales & Marketing and Research & Development costs soared beyond the rate of revenue growth. Another striking point is slide 55 that shows how the FY12 Guidance Midpoint for revenue has increased by $185M or roughly 9% while the Non-GAAP EPS has dropped. Now the earnings drop is mostly associated with the purchase of Radian6, but it further highlights how CRM is buying revenue. Read the full article at Seeking Alpha. Disclosure: Long MSFT. Please review the disclaimer page for more details.