United States Companies

Investment ProposalNotre Dame Student International Business Council

&Oxford Strategy Group

Two Companies Proposed for Potential Investment

SalesForce Facebook

market cap: $52.39 BillionMarket Share: 33.2% CRM

Market Cap: $301.75 BillionMarket Share: 66% Social

Networking

Started 1999Predicted to be 4th largest software company in the world in two years

Global leader in Social NetworkingStrongest Financial statements

Predicted growth

United States Economy AnalysisGeneral trends -- Relatively steady economic growth since 2010- Dominated by services-oriented companies

- Tech, financial services, healthcare and retail- Have honed in on tech

- As in the our most recent decade it has made significant moves and will likely continue to

- Big data and consumer analytics- Uber vs. Taxi - Airbnb vs. Hotel - Netflix vs. cable tv- Social media and peer-to-peer sharing

United States Economy Analysis

United States Economy AnalysisThe reason for strong growth in service and technology industry is the

underlying strength of the US economy:• Good infrastructures• Huge Market• Good investment environment• Excellent supply of talents and good education resources• Strong innovation culture• Global influences

Prediction of Economic TrendsRevenue Growth over next 5 years:

Software publishing: 15% increase in revenue

Data processing: 22% increase in revenue

Prediction of Economic TrendsOverall we expect US GDP Annual Growth Rate to stay around 2% within next 5 years

● Safe market

High technology industries will further expand and claim growing importance

● Growth will depend more on innovation and technology breakthroughs

● Traditional industries will continue to be revolutionised with the emergence of new technologies

IT industryAmong them, IT sector has attained remarkably strong growth in the past decade.

IT Industry – Growing employment

IT Industry – Contribution to Private fixed Investment

SWOT Analysis of US IT IndustryStrengths

1. Variety2. Strong growth3. Quick return on investment4. Strong societal awareness5. Huge pool of talent resources6. Readily accessible investment

funds

Weakness1. Potential for breach in

information security2. Rapid obsolescence cycles3. Technology stagnation

Opportunities1. Markets in emerging economies2. Positive societal expectations3. Huge room for potential growth

(lots of traditional industries in the wake of IT revolution)

4. New technology products

Threats1. Competition from overseas● Low barriers to entry -

emerging economies

Overview of Strategy, and choosing our Investments

Within IT IndustryFocused on two dominating sectors:

• Customer Relations Management (CRM)• Social Networking

Why CRM : • Although Industry value added continues to be in line with national GDP -- industry is

recession proof• the industry's products continue to be accepted by the market

Why Social Networking :• Becoming an integral part everyday life -- continued growth predicted

Facebook OverviewCompany Summary

Facebook, Inc. is a social networking company. The Company is engaged in developing products that enables users to connect and share through mobile devices and personal computers.

Key Facts and Statistics

Founded: 2004IPO Year: 2012Ticker: FB (NASDAQ)Sector: TechnologyIndustry: Internet Content and Info.Headquarters: Menlo Park, CACEO and Founder: Mark ZuckerbergNumber of Employees: 10,082Market Cap: $301.75 Billion

Stock Performance Last Two Years (Compared to S&P)

SWOT Analysis of FacebookStrengths:

1) Diverse user base 2) Mobile integration 3) Cross-platform integration4) Popular, news-savvy management5) Strong stock performance, maintenance of market share

Weaknesses:1) Dependence on ads for revenue2) User privacy, information filtering3) Substantial R/D expenses associated with innovation

Opportunities:1) Recent acquisition of Instagram, WhatsApp → Wide variety

of appeal and interconnectivity2) Expansion in app markets, intriguing safety features3) Inclusion of additional tools for developers, explosion of

new features4) Growth of revenue from payment processing fees, services

completed online5) Broadband growth → Expansion of user base in less-

developed areas

Threats:1) User bias towards SM platform (Snapchat, Twitter, Vine)2) Millennial user “cool” factor3) Trend away from personal, mobile computer usage →

potentially less ad revenue4) Eat or be eaten mentality: talent and creativity outweigh

establishment to some extent → Barriers to entry not terrible for small startups

Source: The Street Industry Data, IBISWorld, Nasdaq

Facebook FinancialsFacebook Industry Average S&P 500

Price to Earnings (P/E)

104.10 59.80 28.61

Price to BV 7.28 6.65 6.94

Price to Sales 19.63 9.56 2.93

Price to Cash Flow

65.70 39.90 15.59

Sales (5YR Growth Rate %)

633 28.84 5.93

The Case for Investing in Facebook

1. 40 million small businesses use Facebook • FB has proprietary ad software so they can track ad effectiveness

2. Over 1 billion people use Facebook daily • Growth is global

3. Instagram, WhatsApp and Oculus Rift have yet to monetize4. Recently invested $500 million in new data center in Texas

Salesforce OverviewSalesforce.com Inc provides enterprise

cloud computing solutions, offering social and mobile cloud apps and platform services, as well as professional services to facilitate the adoption of its solutions.

Founded: 1999IPO Year: 2004 Ticker: CRM (NYSE)Sector: TechnologyIndustry: Software - ApplicationHeadquarters: San Francisco, CACEO and Founder: Marc Bernioff Number of Employees: 16,227Market Cap: $52.06 Billion

Stock Performance Last Five Years (Compared to S&P)Company Summary

Key Facts and Statistics

SWOT Analysis of SalesforceStrengths

1) Robust revenue growth2) Solid stock price performance 3) Compelling growth in net income4) Good cash flow from operations5) Expanding profit margins6) Low level of volatility7) Company's product is user/consumer friendly8) Mature industry and thus revenue is growing at the

same pace as economy

Weaknesses1) High debt management risk2) Negative Net Income3) Profits4) Valuations5) Security

Opportunities1) Jump-start international growth2) Global leaders in niche sector (CRM)3) Cloud market is robust4) Actively acquiring to grow horizontally and vertically

Threats1) It is competing with established brands like Oracle and

SAP2) Barriers to entry are medium and steady

Salesforce Close CompetitorsSalesforce Intuit Dassault

Systemes

Rev Growth (3 Yr Avg)

40 3.3 8.8

Revenue in Millions (TTM)

5,974 4,192 4,368

Price to Sales 8.7 9.7 11.2

Price to Book 11.6 13.4 12.4

Intuit Inc creates business and financial management solutions that help simplify the business of life for small businesses, consumers, and accounting professionals. Dassault Systemes SA provides end to end software applications and services, designed to support companies’ processes. It provides Product Lifecycle Management, 3D Design, and 3D Digital Mock-Up.

The Case for Salesforce1. Salesforce.com Inc provides enterprise cloud computing solutions, offering social

and mobile cloud apps and platform services, as well as professional services to facilitate the adoption of its solutions.

2. Salesforce has customers on long-term contracts generating predictable recurring revenue

3. Revenue continues to grow further and the Salesforce has scores of deferred revenue which will pour into their coffers in the near future.

4. Analyst projected EPS growth over the next 5 years at 55%5. A merger or acquisition deal is on the cards. If some sort of a merger or acquisition

deal does indeed occur then Salesforce’s share value will increase exponentially and investors will make a handsome profit. However, even if the acquisition rumours and the indications given off by the company prove to be unfounded

6. It has brought revolution in technology. It is working on sales diversification by region and more high-end multiple products sales and therefore its stock price has nearly unlimited room to run for early-in-the-know investors.

Recommendation for investmentConservative scenario

Value of money in 5 years, if market grows at the rate of 5%

63814.07813

Salesforce Facebook

Current stock price 71 107

Diversifying investment 12000 38000

Number of stocks that can be bought

169 355

Predicted lowest value of the stock

60 153.6123379

Worth of stocks after 5 years

10140 54532.37995 64672.37995

Growth scenario

Value of money in 5 years, if market grows at the rate of 5%

63814.07813

Salesforce Facebook

Current stock price 71 107

Diversifying investment

12000 38000

Number of stocks that can be bought

169 355

Predicted highest value of the stock

150 153.6123379

Worth of stocks after 5 years

25350 54532.37995 79882.37995

What if scenario

Value of money in 5 years, if market grows at the rate of 5%

63814.07813

Salesforce Facebook

Current stock price 71 107

Diversifying investment

0 50000

Number of stocks that can be bought

0 467

Predicted lowest value of the stock

52 153.6123379

Worth of stocks after 5 years

0 71736.9618 71736.9618

Thank YouPlease feel free to ask questions