Unfortunately his analysis is not right. He is confusing revenues with earnings. P/E of 60 is not the same as Price/Revenue of 60. If you are only doing $1M/month and your margins are say ~10%, you will end up with a value of $60M not $600M.
Interesting post. Shame there isn't any discussion of advertising revenue though. Users that choose not to pay can still generate a lot of revenue from advertising.
Not really. For many high-tech companies, the earnings can vary a lot from one quarter/year to the next. If the profit margin is hovering in the +/-10% range, the P/E can vary wildly. Even in a low-earnings period, wall street will typically not punish the company too much if it expects things to turn around soon.
Regarding Salesforce.com in particular, looks like its 2006 profit margin was 9%, but 2007's was 0.1%. The street is still optimistic though, because the company's revenues increased 60%.
For such companies, the P/S ratio is generally a more reliable metric to compare with. Salesforce.com's P/S ratio is 8.8. For reference, Google's is 13.
I wouldn't believe "forward" anything :). If Salesforce.com goes back to 9% net profit margin next yr, its P/E will become 80. A P/E that's 1.5-3x that of MS is reasonable, since MS's revenues are not growing much.