UPDATE 2-SuccessFactors soars in market debut

(Adds industry data)

By Lilla Zuill

NEW YORK, Nov 20 (Reuters) - SuccessFactors Inc (SFSF.O) soared on Tuesday, a day after an initial public offering that raised $108 million, the top of expectations.

Shares opened at $13 per share, 30 percent higher than its $10 IPO price, By end of day, the shares were at $13.25, up 32.5 percent on Nasdaq.

On Monday, the unprofitable maker of web-based performance management software sold 10.8 million shares for $10 per share, compared with a forecast range of $8 to $10.

Underwriters, led by Morgan Stanley and Goldman Sachs, have the option to purchase an additional 1.6 million shares to cover overallotments.

Based on its opening price, the company has an initial market capitalization of about $650 million.

SuccessFactors said it intends to use net proceeds to pay down debt and for general corporate purposes.

LOSSES MOUNT

For the nine months ended Sept. 30, the company recorded a net loss of $49 million on revenue of $44 million. That compared to a net loss of $22.9 million on revenue of $21.2 million for the same period a year ago. In the quarter ended Sept. 30, its net loss was $20 million on revenue of $16.7 million.

While technology companies selling their shares to the public for the first time are often unprofitable, analysts said most of the new issues year to date have won favor with investors because revenue growth was growing rapidly while losses were narrowing.

"SuccessFactors can't seem to get their losses under control," said Scott Sweet, managing director of research firm IPOboutique.com. "This is very atypical of what we have seen recently."

Francis Gaskins, president of research firm IPOdesktop.com, said SuccessFactors' losses in the last quarter were equal to 121 percent of its revenue for the same period.

"That is a 5.5 times cash burn rate," he said, adding that it was rare to see a new issues going through cash that quickly.

Gaskins added that sales and marketing, research and development and administrative costs gobbled up $30 million in the last quarter -- nearly double SuccessFactors' revenue for the period.

As a provider of Web-based performance management software, SuccessFactors is also up against increasing competition.