Tags: salesforce.com | forecast | earns | rivals

Salesforce.com Forecast Misses Estimate as Rivals Move In

Thursday, 23 August 2012 04:56 PM

Salesforce.com Inc. forecast fiscal third-quarter profit that missed analysts’ estimates as bigger enterprise software rivals moved onto its turf with new online offerings.

Earnings for the period ending in October excluding certain items will be 31 cents to 32 cents a share, Salesforce said in a statement, missing analysts’ average 34-cent estimate compiled by Bloomberg. Sales will be $773 million to $777 million, the company said, exceeding the average $772 million estimate.

Larger competitors Oracle Corp. and SAP AG are selling more sales and human resources software over the Web, emulating San Francisco-based Salesforce’s business model.

“Oracle made the decision that they need to become a bigger player in the cloud space,” said Mark Moerdler, an analyst at Sanford C. Bernstein & Co. “They are taking their traditional playbook and applying it,” buying smaller companies that can add sales and technical expertise.

Oracle is augmenting its traditional business applications that run on companies’ own computers with products it can deliver through a cloud computing model like Salesforce does, said Moerdler, who is based in New York and has an underperform rating on Salesforce.

Shares fell 4.3 percent in late trading Thursday after losing 1.2 percent to $146.77 at the close in New York. The stock has gained 45 percent this year, compared with a 11 percent gain in the Standard & Poor’s 500 Index.

Cloud Computing

Sales for the second quarter, which ended in July, rose 34 percent to $731.6 million, compared with analysts’ average estimate of $728.2 million. Earnings excluding some items were 42 cents a share, compared with the 39-cent estimate of analysts.

Salesforce posted a net loss of $9.8 million in accordance with generally accepted accounting principles, compared with analysts’ estimate of a $14.9 million loss.

Chief Executive Officer Marc Benioff has been expanding beyond the company’s core software for managing sales leads and customer service by making acquisitions to add programs for human resources and marketing through Facebook Inc. and Twitter Inc. Salesforce’s $689 million acquisition of Buddy Media, which lets businesses create Facebook campaigns, closed Aug. 13.

At Salesforce’s Dreamforce conference in San Francisco Sept. 18 to 21, Benioff plans to announce new suite of HR tools called Work.com.

Oracle says it’s already booked $1 billion from cloud computing, as well as online human resources and customer support companies it acquired in the past year. SAP this year bought online HR software maker SuccessFactors.

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Thursday, 23 August 2012 04:56 PM
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