Published: July 14, 2004 in Knowledge@Wharton Salesforce.com has a little 1999 in it. The company still carries a dot-com in its moniker even though others have dropped the suffix for fear of being typecast. It can party in a style reminiscent of 1999, throwing galas for such dignitaries as the Dalai Lama with entertainment from such stars as David Bowie. And like many companies circa 1999, Salesforce.com is pitching a revolution that will upend the establishment. A recent initial public offering with a first-day pop of 56% completes the flashback.

 

The big question is whether this company, which hosts customer relationship management software and delivers its services through the web, can rekindle some of the IPO heyday of five years ago. Experts at Wharton say it’s unlikely that the euphoric — some would say ridiculous — days of heady valuations for the latest and greatest companies will return. Nevertheless, Salesforce.com’s IPO, which basically serves as a warm-up act for Google’s expected big splash, is a nice confidence builder for the stock market, technology companies and Internet players. Why? “In 2001, 2002 and 2003 the IPO market was shut down in a way it hasn’t been before,” says Andrew Metrick, a finance professor at Wharton. “It could be the return of a more healthy stock market as good companies raise capital.”

 

Indeed, other Internet players such as comparison-shopping company Shopping.com and RightNow Technologies – a Salesforce.com rival – are also preparing to go public. 

 

For the broader markets, the offering of Salesforce.com and the upcoming debut of Google inject some excitement into the stock market, which has been lackadaisical in 2004. That could give people a reason to invest and drive up stocks. Is it time to get giddy? Not quite. “It’s way too early to say this is the beginning of a bubble for technology stocks, and it’s too early to declare the market is healthy,” says Metrick.
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