Few big investors more positive about tech stocks after Goldman conference

SAN FRANCISCO — This week's Goldman Sachs conference of hedge-fund managers and institutional investors closed with a lukewarm feeling about technology stocks.

At the investment banker's Technology and Internet Conference, an analyst asked a room full of several hundred investors how many would leave feeling more positive about technology stocks. One man raised his hand halfway.

That was the temperature of the room after three days of sessions with about 100 companies dispatching executives to give pitches.

The conference had some entertaining moments when investors were not fixated on free cash flow and stock buybacks.

Marc Benioff, chief executive of cloud-computing company Salesforce.com, called Microsoft "somewhat disgusting" for its fixation with the Windows operating system, and went on to spread around disdain for SAP and IBM.

Here are the last day's highlights.

Salesforce.com: Benioff went off on a Microsoft rant. Salesforce.com competes with Microsoft's business software and in cloud computing.

First on mobile: "In the world of mobile, which is only behind social" in importance, Benioff said, "they are nowhere."

Benioff said Microsoft was upset when it was No. 2 behind BlackBerry and it was upset when it was No. 3 behind Apple. Now how does it feel when it's 10th? he asked.

Here's a reality check on his numbers: According to research firm IDC, the rankings for mobile operating-system shipments in 2009 were: 1. BlackBerry (19.6 percent), 2. Apple iPhone (14.4 percent), 3. Microsoft Windows Mobile (10.7 percent), 4. Google Android (3.5 percent).

Benioff also made fun of Waldorf, Germany-based SAP, although he also praised the enterprise software company for its "high value, high trust" relationships with customers.

"SAP is the anti-cloud," he said. "They're like, 'Oh, the cloud, it does not exist,' " he said, mimicking a Euro accent.

Next up, IBM. "If you're not changing and rapidly evolving, you basically get transformed into some big services company like IBM," he said. "That's their story: Owned the industry, now it's a services company."

And finally, Oracle, which was tempered with some backhanded respect. Benioff said Oracle's "killer app" is acquisitions.

"You have to give Larry (Ellison, CEO) credit for the ability to ingest companies and spit out their numbers," he said. "We're fundamentally impressed" by that ability.

Benioff said of Salesforce.com, "Our innovation is innovation."

Social TV: Representatives from online video companies Brightcove, Boxee and Roku spoke on a video panel, and Avner Ronen, Boxee chief executive, posed an interesting question: Where is the new social TV for millennials?

This demographic consumes video through YouTube, Hulu or Facebook rather than obeying the rules of the television networks or even cable television. As teenagers, they watched it on computers and phones, but they are now moving into their own apartments and will probably want something in their living room larger than a laptop screen.

"If you're 20 years old and just watch Netflix and YouTube, I'm not sure how much you need a cable subscription," Ronen said.

"The focus should be on young consumers. For them entertainment means something different. They are moving into apartments. The industry should serve them."

Apple vs. Windows: On Tuesday, Apple Chief Operating Officer Tim Cook told the conference Apple is gaining business users, both with Mac computers and with the iPhone.

Cook said traditional chief information officers are changing the way they buy computers and allowing employees to opt for Macs. He also said 70 percent of Fortune 100 companies are testing iPhone deployment.

Goldman Sachs analysts asked a panel of chief technology officers Wednesday whether they were buying Macs.

P.K. Agarwal, officer of technology services with the state of California: "I don't have good numbers for it. We are certainly seeing a little more penetration of Apple products in the enterprise, but they seem to be working better than they have in the past." (His 2010 budget is $3.5 billion.)

Gary Schermerhorn, co-CIO of Goldman Sachs: "There's nothing going on like that in Goldman. Tolerating is different from adapting. Like a MacBook, you could plug in to [a corporate network] now, but you couldn't before. [But] it doesn't have the same performance. IPhone is not ready for a company like us that is paranoid about our data."

Tom Peck, Levi Strauss senior vice president and CIO: "We have a couple hundred Macs on the design side. There are a lot of IT folks that are no longer fighting it. We are no longer fighting, but we are not allowing it to proliferate."

Analyst's forecast: Goldman Sachs analyst Sarah Friar, who covers Microsoft, talked Thursday about software-industry trends:

Large enterprise tech spending rebounds. Large corporations will begin upgrading PCs to Windows 7 in 2010, she said, pointing to comments made during the conference by Intel and Microsoft. Intel predicts the notebook market will grow 20 percent this year. Friar also said there may be improved spending among small and medium-sized businesses.

Software as a service. "The unstoppable shift to SaaS is clearly something you are going to hear a lot more from us," she said. "I'm amazed by how many SaaS companies are starting. ... All are getting to $40 million to $50 million revenue relatively quickly."

Software as a service essentially refers to cloud computing, in which businesses use applications on demand. Those programs operate from and are stored in servers.

Desktop virtualization. Friar expects desktop virtualization to reach an inflection point in 2010. The technology stores a PC's operating system and other software on a server, and the PC user connects to it through the Internet or corporate intranet.

More consolidation. Mergers and acquisitions are likely on the rise, she said.

Sharon Pian Chan: 206-464-2958 or schan@seattletimes.com