Monday, July 17, 2006

Calls of Note Part 1

Couple of firms commenting on (NYSE:CRM):

* Baird notes they recently completed their fourth quarterly survey of partners/integrators/clients -- this quarter it represents 54 companies within the ecosystem (40 clients and 14 partners/integrators). Based on the responses, they expect FQ2-07 (July quarter) user additions to be somewhat flat sequentially - firm anticipates 43-47k (lower than current estimate of 48k), roughly in line with the 45k added in Q1.

Based on partner/integrator comments, they heard of fewer large deals in Q2 than in Q1, and heard of one large client (1,500 subscribers) that is expected to leave at the end of the contract. Clients appear to remain highly satisfied -- few would consider a different CRM system if the economy slowed and only a handful would consider a reduction in subscribers. Firm expects FQ2-07 EPS and revenue to be roughly in line with their estimates and guidance (though acknowledge that the stock could trade more on the subscriber additions). Maintains Neutral and $29.

* Cowen notes CRM has been under extreme pressure over the last six weeks as the market has sold off and Microsoft has turned up the volume on its competitive offerings. Based on the divergence between the assumed financial metrics at $22 and firm's potentially conservative earnings model, CRM looks a compelling investment at current levels. Channel checks indicate a material pick up in business in June following a seasonally soft May, and they continue to expect avg. rev per subscriber to tick up on strong sales of Unlimited Edition. Firm believes the market is overly skeptical regarding the company's unique value proposition and its ability to execute.
Maintains Outperform.

Notablecalls: I would not be surprised to see CRM bounce a bit today. Would not hold below 21.50, though.

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