Software as a Service Stocks: Painful 2008
Assuming Congress really does approve a Wall Street bailout in the next few hours, Software as a Service stocks (and other stocks) could get a lift when US markets open on September 29. However, there’s no denying that SaaS stocks have had a miserable year so far.
For the week ended Sept. 26, MSPmentor’s SaaS 20 Stock Index fell 4.53 percent. And for the year, our index is now down nearly 17 percent.
Even the most prolific SaaS companies –names like Salesforce.com (symbol: CRM) and NetSuite (N) — aren’t growing profits fast enough to meet Wall Street’s lofty demands.
After going public in late 2007, NetSuite shares have fallen more than 50 percent this year. This year’s other big SaaS losers (at least on Wall Street) include:
- Salary.com (SLRY), which specializes in compensation software, down nearly 65% this year
- Omniture Inc. (OMTR), maker of online analytics software, down 38.93%
- Taleo Corp. (TLEO), which specializes in on-demand HR software, down 35.36%
- RightNow (RNOW), a SaaS CRM specialist, down nearly 23%
- Salesforce.com (CRM), the poster child for SaaS, down nearly 20 percent
- Kenexa Corp. (KNXA), an HR recruiting SaaS specialist, down 17.10%
I still believe in SaaS, but it’s clear investors want to see SaaS companies deliver stronger growth and faster profits. The SaaS 20 Stock Index provides a healthy reminder that even the hottest technology sectors often don’t live up to their short-term hype.