Salesforce.com Shares Plunge on Outlook, Weaker than Expected Billings (CRM)

Shares of Salesforce.com Inc. (NYSE: CRM), a provider of enterprise cloud computing applications, plunged on Friday after the San Francisco, California-based company gave a tepid outlook. Salesforce.com also posted a loss in its third quarter as its marketing and sales costs jumped. Investors were also disappointed as the company’s billings for the third quarter fell short of analysts’ estimate.

Salesforce.com shares fell to an intra-day low of $111.08 before the finishing the day 10.04% lower at $113.43.

Saleforce.com’s lackluster outlook indicates it will not avoid the effects of cutbacks in corporate spending in technology. However, CEO Marc Benioff said that he does not feel like the economy is going into a recession.

For the third quarter, Salesforce.com reported a net loss of $3.8 million, or $0.03 per share, compared with a profit of $21.1 million, or $0.15 per share reported for the same period in the previous year. The net loss was primarily due to sharp rise in operating costs. The company’s operating costs rose 49% on a year-over-year basis in the third quarter, outpacing sales growth.

Excluding one-time items, Salesforce.com reported a profit of $0.34 per share, beating analysts’ estimate of $0.31 per share.

The company’s sales for the quarter rose 36% to $584 million, beating Street estimates of $571.5 million.

Although the company reported better than expected earnings and sales for the third quarter, its billings for the quarter fell short of expectations.

For the current quarter, Salesforce.com expects adjusted earnings to come in between $0.39 per share and $0.40 per share, compared with Street estimates of $0.40 per share. The company expects current quarter revenue to come in between $620 million and $624 million.

For fiscal year 2013, the company expects sales to come in between $2.88 billion and $2.92 billion. The sales forecast for fiscal year 2013 includes projected revenue from Model Metrics.

Post Written By: Ed Liston Ed Liston is a senior contributing editor at TheStockMarketWatch.com. An active market watcher and investor, Ed guides an independent team of experienced analysts and writes for multiple stock trader publications. He is widely quoted in various financial publications on the Internet. When Ed is not writing about stocks, investing in stocks, talking about stocks, or otherwise doing something stock related, he likes to go sailing and fishing in his yacht.