Salesforce shares tumble on concerns about growth
BOSTON (Reuters) - Salesforce.com (CRM.N) shares plunged as much as 16 percent on Thursday on concerns the business software maker's growth is slowing after its quarterly orders were lower than some investors had expected.
Salesforce sells subscriptions to software accessed over the Internet, which companies use to manage their sales, market and customer service efforts.
The company books the revenue quarter-by-quarter over the life of multiyear contracts, and Wall Street pays close attention to the as-yet-unused part, called deferred revenue, as an indication of new orders booked during the quarter.
"We advise investors to stay on the sidelines given our concerns regarding ... potentially weak bookings growth," Wedbush Morgan Securities analyst Michael Nemeroff said in a note to investors.
Analysts attributed the lower-than-expected bookings to the weak economy.
Salesforce may also be losing some business to bigger rival Oracle Corp (ORCL.O), which launched a new version of its competing Siebel CRM On Demand software earlier this year, said JMP Securities analyst Patrick Walravens.
Salesforce Chief Executive Marc Benioff refuted that theory, saying his win rate versus Oracle has not changed.
The company said on Wednesday that year-on-year revenue growth will slow during its current, third quarter to 42 percent, from 49 percent growth during the second quarter.
Shares in the San Francisco-based company fell $9.39 to $55.91 on the New York Stock Exchange after trading as low as $54.90. Some 1.3 million shares had changed hands as of late morning, more than double the three-month daily average.
(Reporting by Jim Finkle; editing by Gunna Dickson)
