UPDATE:Salesforce.com Beats 4Q Views, Lowers FY2010 Revenue Range
February 25 2009 - 7:10PM
Dow Jones News
Salesforce.com Inc.'s (CRM) fiscal fourth-quarter net income
nearly doubled as the online business applications company beat
sales and earnings estimates, putting to rest some recent fears
about the company's growth.
Following the results, shares surged 10% to $31 in after-hours
trading as investors expressed relief that the company's revenue
growth hadn't significantly declined. The stock later fell back to
$29.70.
In spite of the stronger-than-expected fourth-quarter
performance, Salesforce.com did lower its fiscal 2010 revenue
forecast range, a move it said reflected greater economic
uncertainty.
The stock has lost about half its value since September amid
mounting fears that the challenging tech environment would prompt
IT customers to curb spending on Salesforce.com's business tools.
Rumors had also surfaced recently that the departure of several key
executives suggested sales were deteriorating faster than
expected.
Earlier this month, the departures of President and Chief
Strategy Officer Steve Cakebread and two sales-related executives
raised concerns about the company's performance.
For the period ended Jan. 31, Salesforce.com reported net income
of $13.8 million, or 11 cents a share, up from $7.4 million, or 6
cents a share, a year earlier.
Revenue grew by 34% to $289.6 million amid subscription and
support-revenue growth.
In November, the company projected earnings of 6 cents to 7
cents a share on revenue of about $284 million to $285 million.
Salesforce.com expects fiscal first-quarter net income of about
10 cents to 11 cents a share on revenue of $304 million to $305
million. Analysts polled by Thomson Reuters on average forecast net
income of 10 cents a share on revenue of $305 million.
For fiscal 2010, the company sees net income of 54 cents to 55
cents and lowered its revenue view to $1.3 billion to $1.33 billion
from November's $1.35 billion to $1.36 billion.
In 2009, San Francisco, Calif.-based Salesforce.com, whose core
product allows sales and marketing staff keep track of their
customers online, became the first online business software company
to top $1 billion in revenue, with revenue coming in at $1.08
billion, up 44% from fiscal 2008.
Analysts said the fourth-quarter figures allayed some of the
recent concerns about the company's performance. Wedbush Morgan,
which rates the stock at hold, said, however, that concerns remain
that Salesforce.com's growth will slow as the small to medium-sized
customers which comprise a large section of its user base
increasingly feel the pinch from the worsening economy.
But Salesforce.com executives said they saw little evidence of
changing customer behavior, with average selling prices and the
terms of customer contracts largely unchanged.
Chief Executive Officer Marc Benioff also pointed to a number of
deal wins during the quarter which came at the expense of Oracle
Corp. (ORCL), the database and enterprise software giant, and SAP
AG (SAP), the German business software company.
Salesforce.com will take a more aggressive approach to cost
management in its first quarter, Chief Financial Officer Graham
Smith said.
Last year, Salesforce.com formed separate partnerships with
Internet company Google Inc. (GOOG) and social-networking site
Facebook, underlining growing competition in cloud-computing
services, the growing use of the Internet to access both databases
and software applications hosted by service providers.
-By John Kell and Jessica Hodgson, Dow Jones Newswires;
201-938-5285; john.kell@dowjones.com