salesforce.com, inc. (CRM): How to Wipe Out Your Liquidity in a Single Transaction

Similarly, German software giant SAP AG (ADR) (NYSE:SAP) has $1.1 billion of working capital on hand, moreover, it generates $5 billion of cash flow from operations annually, so acquisitions such as its recent purchase of cloud provider hybris, said to be in the $1.0 billion to $1.5 billion range,really don’t impact resources in a substantial manner. What for salesforce.com, inc. (NYSE:CRM) is a huge transaction in taking over ExactTarget Inc (NYSE:ET)t is simply a course of business purchase in a relatively new revenue stream for the likes of SAP and IBM.

Steering clear
With its trail of quarterly GAAP losses and a depleted balance sheet, salesforce.com, inc. (NYSE:CRM) has weakened its financial flexibility for at least a year, if not further. Should it need to bulk up its resources, it can always issue more shares, diluting current shareholders, or issue more convertible debt, further blemishing its debt-to-equity ratio. But investors should be very wary of purchasing this stock, especially given its high valuation — the foundations are beginning to look very weak.

Fool contributor Asit Sharma has no position in any stocks mentioned. The Motley Fool recommends Amazon.com, Bank of America, and Salesforce.com. The Motley Fool owns shares of Amazon.com, Bank of America, and International Business Machines (NYSE:IBM).

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