Chatter No Dim Idea For Salesforce.com

Salesforce.com recently acquired DimDim for $31 million to bolster its Chatter application business. [1] Chatter is an application that provides social networking and real-time connection features for enterprises. During the Chatter collaboration network constitutes less than 4% of our estimate for Salesforce.com stock, the impact this product could have on other aspects of the business does provide real upside for the company.

Salesforce.com could use Chatter to expand its enterprise customer base and up-sell its more valuable cloud-based products like its customer relationship management or computing software. Salesforce.com competes with SAP, Oracle, Microsoft and IBM in the CRM software market.

Our price estimate for Salesforce.com stock stands at $128, which is about 10% below market price.  As Chatter individually generates less than 4% of our price estimate for the company, cloud-based customer software and cloud computing remain the largest value contributors for Salesforce.com.

Chatter is a cloud-based social collaboration application through which enterprise users can create profiles with professional information like personal contact data, area of expertise, and work history. Users can as well share business documents and post status updates on individual documents and applications, as then as form discussion groups.

The advantage that Chatter has over other social networking sites like Facebook and Google Buzz is that it provides additional security and privacy features. With the acquisition of DimDim, the company will likely add web-conferencing capabilities to the Chatter application. This would presumably be in the form of a browser-based web conferencing platform based on an open-source platform.

The growth possibility could be even greater if the company manages to up-sell its other cloud-based products like Force.com, a development platform for corporate IT departments and independent developers to build business applications.