Saturday, April 16, 2011
Green Cloud Stocks
If you watch much television, you have probably seen several commercials relating to Microsoft's (MSFT) Cloud service. So what is this 'cloud' that all these techies are talking about?
An easy way to explain cloud computing is having your programs and data stored remotely on a server far away, instead of on your own individual computer. As long as you have an Internet connection, you can have a fairly dumb computer ans still utilize cloud computing. The clouds are simply the servers of companies that provide this service, and those servers can be located anywhere in the world. If you have Yahoo (YHOO) mail, Google (GOOG) gmail, or hotmail, then you are using cloud computing in a small way. You don't have the email servers in your office or home, you use the Yahoo or Google servers. Many colleges and universities are turning over their student email services to Google, which saves them money on servers and saves on staffing for support.
These same benefits apply to companies, especially when extended to data storage and computer software. There is no need for a technician to come out and install new software to each employees' station. There is also no need for a bunch of network administrators monitoring the company's servers.
In addition to the personnel side, there are also many green (and financial) benefits. Companies don't need to periodically upgrade computers, and they don't need to own a lot of servers. The costs and issues relating to the disposal of old computers and servers is reduced dramatically. There is no need to deal with data security, as that is the job of the cloud computing company. The benefits of clouds are extensive, and there are over 25 stocks in the cloud field, according to the Cloud Computer Stock list at WallStreetNewsNetwork.com, which includes companies involved in server farms and outsourced storage systems.
One fast growing example is Salesforce.com (CRM), which is a provider of customer-relationship management services that has promoted 'the end of software'. Salesforce has customers ranging from the very small to the very large, including Corporate Express division of Staples (SPLS), Daiwa Securities (DSECY.PK), Expedia (EXPE), Dow Jones Newswires subsidiary of News Corp. (NWS-A), SunTrust Banks (STI), and Kaiser Permanente. Salesforce trades at a very high 72 times forward earnings. Revenues for the latest quarter were up 29%, however, earnings dropped almost 47%.
VMware (VMW) is another major cloud and virtualization company. Its product VMware vSphere is a cloud computing data center platform. It sports a forward price to earnings ratio of 39.6. The company reported that latest earnings increased an amazing 112% in earnings on a 37% increase in revenues.
Citrix Systems, Inc. (CTXS) provides on demand applications and online services, including GoToMeeting, GoToWebinar, GoToTraining, GoToAssist, and GoToMyPC. This debt free company has a forward PE of 28. The latest quarterly earnings were up 7% on a revenue increase of 17%.
To access a free Excel spreadsheet database of numerous companies involved in cloud computing in some way, that can be downloaded, sorted, and updated, go to wsnn.com. You can also get info on the green aspects of cloud computing from my book The Green Light on Green Stocks: A Quick Guide to Green Investing and Making Money in Alternative Energy Stocks, in which I described cloud computing as a green industry and a way of providing money saving services to many corporations.
Disclosure: Author owns YHOO.