Although we don't believe in timing the market or panicking over market movements, we do like to keep an eye on big changes -- just in case they're material to our investing thesis.
What: Shares of cloud-computing specialist salesforce.com (NYS: CRM) fell as low as 10% on Friday after its quarterly billings disappointed Wall Street.
So what: Salesforce's third-quarter top and bottom line actually topped estimates, but a miss on billings -- billings grew 29% versus the consensus of mid-30% growth -- suggests that its breakneck business momentum is slowing. Of course, CEO Marc Benioff tried to reassure investors by saying that billings are "not a great indicator of the performance of the company" and that "business is going great."
Now what: In fact, management's current-quarter and fiscal 2013 revenue forecasts easily topped Wall Street estimates. But while Salesforce might have just hit a soft patch, today's sell-off clearly shows just how perfectly it has to perform merely to satisfy Mr. Market, let alone impress him. Given the ever-intensifying competition from cloud-computing gorillas like Oracle (NAS: ORCL) and Google (NAS: GOOG) , Salesforce's valuation still doesn't leave much room for error.
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At the time thisarticle was published Fool contributor Brian Pacampara owns no position in any of the companies mentioned. Motley Fool newsletter services have recommended buying shares of salesforce.com and Google. Motley Fool newsletter services have recommended shorting salesforce.com. The Fool owns shares of Oracle and Google. Try any of our Foolish newsletter services free for 30 days.We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Fool's disclosure policy always gets a perfect score.
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