Tags: Salesforce | Estimates | Products | Buyers

Salesforce Tops Estimates as New Products Lure Buyers

Thursday, 28 Feb 2013 06:59 PM

Shares of Salesforce.com Inc., the largest maker of online customer-management software, rose Thursday after the company reported sales and profit that topped analysts’ estimates as it expanded in marketing and customer-service tools.

Sales in the fiscal fourth quarter, which ended in January, increased 32 percent to $834.7 million, the company said in a statement. That compares with analysts’ average estimate of $830.9 million, according to data compiled by Bloomberg. Profit excluding certain items was 51 cents a share, exceeding the prediction for 40 cents.

Chief Executive Officer Marc Benioff is pushing beyond cloud-computing software for sales management, offering customer service, online marketing and human-resources tools to accelerate growth. Corporations are now more willing to pay subscriptions to run their operations over the Web using Salesforce products

“Obviously people liked the quarter, and they liked the earnings,” said Pat Walravens, an analyst at JMP Securities LLC in San Francisco. He recommends buying the shares.

Salesforce, based in San Francisco, rose as much as 9.3 percent to $184.95 in extended trading, after advancing 1.4 percent to $169.22 at the close in New York. The company is planning a four-for-one stock split that would make each of its shares more “affordable and attractive” to more investors. The shares have soared eightfold since November 2008, compared with a 108 percent increase in the Standard & Poor’s 500 Index.

Billings Growth

“The guidance was middle of the road,” Walravens said in an interview. “What you really want to understand is how good the billings number is.”

Billings, the amount invoiced to customers, grew 28.5 percent to $1.4 billion in the fourth quarter, compared with the $1.28 billion average of eight estimates compiled by Bloomberg. Analysts calculate the billings, which Salesforce doesn’t directly report.

Revenue for the current quarter, which ends in April, will be $882 million to $887 million, compared with the $886.9 million average estimate of analysts. Profit excluding certain items will be 40 cents to 42 cents a share, compared with analysts’ 42-cent projection.

For the current fiscal year, revenue will be $3.82 billion to $3.87 billion, Salesforce said, compared with analysts’ prediction for $3.85 billion.

Benioff has lately been expanding into tools for human resources and online marketing, paying $689 million last year for Buddy Media Inc., whose software helps companies place advertisements on Facebook and Twitter Inc. Salesforce has also begun selling ads that appear alongside status updates on Twitter, one of the first companies to do so.

Acquisition Strategy

“I feel good about the acquisition, and I feel good about the direction with marketing,” Benioff said in a recent interview. “We want to build a strong marketing product line but mostly through acquisition. That’s different than how we built sales and service, which was organically. We can go faster by buying.”

Salesforce posted a fourth-quarter net loss of $20.8 million, compared with $4.08 million a year earlier. Salesforce is spending heavily on sales compensation and marketing expenses as it seeks to take advantage of growing demand for cloud computing.

“They’re landing elephants,” said Brent Thill, an analyst at UBS AG in San Francisco. He recommends buying the shares. “There’s a sense that their total addressable market keeps expanding with the marketing cloud, and the big guys, Oracle and SAP, are racing to catch up.”

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Shares of Salesforce.com Inc., the largest maker of online customer-management software, rose Thursday after the company reported sales and profit that topped analysts' estimates as it expanded in marketing and customer-service tools.
Salesforce,Estimates,Products,Buyers
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2013-59-28
Thursday, 28 Feb 2013 06:59 PM
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