Benioff Sounds Off

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But we're not going back to disclosing our number of subscribers each quarter. It's not a meaningful, revenue-based metric. We don't think investors should look to non-GAAP numbers. High-fidelity numbers like revenue, profit, and cash flow are things investors should measure us on. It didn't make any sense to me why people should anticipate a subscriber number. We're not just a one-product company. When we were a single-product company with salesforce automation, then it was apples to apples. Now it's apples to oranges.

The company's generating a lot of cash: $52 million last quarter, exceeding analysts' estimates by a long shot. And you have $571 million in cash on hand. How do you plan to use it? Will you make any acquisitions larger than the handful of small ones you made in 2006 and 2007?

The business churns out cash; it's a much purer representation today of [our] total business health. Our acquisitions so far have been small, insignificant transitions. We have a goal of getting $1 billion in cash on hand, and until we get to that, you won't see us do strategic acquisitions. In this industry, if you don't have $1 billion in cash on hand, then you're not doing your shareholders the best service. It gives you the protection to have a sustainable business over time. You will see margin expansion—it's part of our plan, and cash flow is the best leading indicator of this. It's also true in your personal life. I believe the phrase is, "cash is king."

So far, you've been managing the business to generate a slight profit or break even. Are there alternative ways to handle things?

We started including stock-based compensation in our numbers: Last quarter it was $14.2 million. We've also invested very heavily in [sales] and data-center infrastructure. We've had to build this company from scratch. We didn't buy this company—we built it. And you pay for that in the current quarter, though revenue is deferred. So even though I signed Citigroup, I'm not collecting any material revenue from them in this quarter. My contracts are timed, and there's revenue recognized each month. But we have more visibility because we know what's coming, which is why we've been so accurate in our forecasts.

Oracle CEO Larry Ellison said in November that he would deliver new customer management software early in 2008 to compete with Salesforce. And SAP has a new product coming out. Does the potential for these vendors to sell customers not just CRM, but an entire stack of software, make them more compelling?

I watched all the major keynotes at Oracle's recent conference, and I still can't figure out their strategy. It's not that I'm knocking their strategy; I just don't know what it is. Their innovation the last five years has been in the business model. But I have the highest respect for the company. They've doubled the revenues since I left nine years ago, to about $20 billion. Oracle has bought all these companies and is running them as independent units. They're becoming the General Electric (GE) of software. Oracle doesn't consolidate the sales forces, which I think is smart.

Speaking of acquisitions, do you think Oracle will end up buying BEA Systems (BEAS), which is pushing for a higher price than Oracle originally offered?

I don't think Oracle wants them. I think Larry is just screwing with Alfred [Chuang, BEA's chief executive]. That's just the way Larry does business.