UPDATE 3-Salesforce.com raises outlook, shares up
(Adds comments from analyst, Salesforce CEO)
By Jim Finkle
BOSTON, Feb 27 (Reuters) - Salesforce.com Inc (CRM.N) provided a full-year revenue forecast on Wednesday that was slightly above Wall Street estimates even in the face of a weakening U.S. economy.
Shares of the company, a pioneer in the Web-based software market, rose 8 percent on the news, released after the markets closed. It is the biggest provider of software as a service.
Salesforce raised its fiscal 2009 revenue forecast to between $1.030 billion and $1.035 billion, from its November forecast range of $1.0 billion to $1.02 billion.
It also said it expected full-year net income to be between 32 cents and 33 cents per share. Analysts on average were looking for earnings per share of 32 cents on revenue of $1.027 billion, according to Reuters Estimates.
Chief Executive Marc Benioff said the San Francisco company's products were selling well both globally and domestically, where analysts say technology spending is not expected to match last year's rate of growth.
Benioff attributed the performance to rising interest in its approach of selling software as a service delivered over the Internet.
"We are reaping the harvest of a lot of investments we have made in the past," he said during a conference call with analysts. "We are the worldwide market and technology leader in the most important change in the software industry. We think that is what you are seeing.
Analysts say that Salesforce.com and other software makers that specialize in the software-as-a-service model are set to outperform the rest of the industry in a recession because the upfront costs of buying their products are relatively low.
"There is less upfront and ongoing capital investment, less risk," with software that is delivered as a service and sold via subscription, said Rebecca Wettemann, an analyst with Nucleus Research.
Interest in buying software as a service is growing as the economy weakens, said Wettemann, whose firm advises businesses on which technology products to buy.
Established software makers, including Oracle Corp (ORCL.O) and SAP AG (SAPG.DE), are experimenting with software as a service, but they sell the bulk of their products the way they always have: companies pay for the software in advance, install it on computers and pay maintenance fees.
Salesforce reported fourth-quarter net income of $7.38 million, or 6 cents per share, up from $516,000, or nil per share, in the year-ago period. That beat the average analyst forecast for earnings of 4 cents per share, according to Reuters Estimates.
Revenue rose 50 percent to $217 million during the quarter, compared to Wall Street expectations of $209 million revenue.
Salesforce also said it expects to report fiscal first quarter net income of 6 cents to 7 cents per share on revenue of $233 million to $235 million.
Analysts were looking for first quarter earnings per share of 6 cents and revenue of $228 million, according to Reuters Estimates.
Salesforce shares were up 8.3 percent at $57.00 in after-hours trading, compared to their $52.62 close on the New York Stock Exchange. (Reporting by Jim Finkle; editing by Richard Chang, Leslie Gevirtz)
