Wall Street’s ongoing struggle to make sense of the cloud
February 12, 2015
Grazed from CNBC. Author: Ari Levy.
Wall Street has become quite familiar by now with cloud computing. The model of delivering services over the Web has gained so much momentum that public market investors, who traditionally parked their tech dollars with Microsoft, IBM, Oracle and Cisco, have dozens of new stocks to choose from if they want growth.
But despite the hype surrounding cloud and the rapid influx of capital from money managers, Wall Street is still puzzled when it comes to valuing cloud vendors. That’s because, of the 26 index members to go public most recently, 21 are losing money on a GAAP (generally accepted accounting principles) basis. And not just a little dough. Those unprofitable companies were a combined $388.7 million in the red in the last quarter…
Wall Street doesn’t seem to care. Right now, some 28 publicly traded cloud computing companies are worth at least $1 billion, according to the BVP Cloud Computing Index, an index created in 2013 by Bessemer Venture Partners. Of the 42 companies the index tracks, worth a combined $173 billion, 26 have gone public in the past three years. Others like Eloqua and ExactTarget went public before getting acquired…
Read more from the source @ http://www.cnbc.com/id/102410173#.