Tuesday, September 16, 2008

Cloud Computing Joins the S&P 500

I’ve been watching news blurbs and press releases about Salesforce.com being added to the S&P 500 with passive interest. Interest, because it’s Salesforce.com. Passive, because I’m not enough of a finance geek to know how big a deal this is, or what it really means.

The big news is that Salesforce.com is the first Software-as-a-Service (Saas) company to be placed on Standard & Poor’s S&P 500 Index. That’s big news for cloud computing in general, and Salesforce.com in particular.

"The decision to add salesforce.com to the S&P 500 is a clear sign that cloud computing has arrived," said Marc Benioff, Chairman and CEO at Salesforce.com. "Every day, more than 47,000 customers rely on salesforce.com to help run their businesses. Now that incredible record of success in cloud computing has a new home -- the S&P 500."

According to their website, Standard & Poor provides "independent credit ratings, indices, risk evaluation and investment research and data". The company picks the 500 leading companies in the leading industries of the U.S. economy, and monitors them on the S&P 500. In order to remain on the S&P 500, companies must have a market capitialization of $5 billion (SFDC has a market cap of $6.8 billion), and at least half of the companies shares must be publically owned.

The company that is coming off the S&P 500 Index, opening the spot for Salesforce.com, is Freddie Mac (Federal Home Loan Mortgage). The failing lender's market cap dropped to $614 million last week. Soon after, the U.S. government siezed control of the company (along with Fannie Mae), fired all of it’s executives, and burdened U.S. tax payers with the massive bail-out debt. Be sure to send a thank you letter to your political leaders!

Salesforce.com has some great company on the S&P 500 Index. Three of the top ten companies are all in IT: Microsoft, IBM and Apple. Go, Salesforce.com, go!

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