UPDATE 3-Salesforce revenue outlook disappoints

(Adds analyst comments, share price, byline)

By Jim Finkle

BOSTON, Aug 20 (Reuters) - Business software maker Salesforce.com Inc (CRM.N) forecast slowing revenue growth, sending its stock down 8 percent on Wednesday, even as it reported that quarterly profit doubled.

The San Francisco company also predicted current-quarter earnings that lag some analysts' targets, which was taken as a sign that the weak U.S. economy and possible competitive pressure were hurting results.

Salesforce sells subscriptions to Internet-accessed software. It 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 future business.

Second-quarter deferred revenue of $480 million was not significantly different from the $470 million posted at the end of the first quarter or $481 million at the end of the fourth.

"Deferred revenue didn't grow as much as people thought it would (during the second quarter)," said JMP Securities analyst Patrick Walravens.

He attributed the lower-than-expected bookings to the weak economy, but said Salesforce may also be losing some business to rival Oracle Corp (ORCL.O), which launched a new version of its competing Siebel CRM On Demand software earlier this year.

In addition, Salesforce said revenue growth from a year earlier will slow during its current, third fiscal quarter to 42 percent, down from 49 percent during the second quarter.

Salesforce Chief Executive Marc Benioff said in an interview that his company's win rate versus Siebel CRM On Demand has not changed since the product was launched.

EARNINGS

Salesforce reported net income of $10 million, or 8 cents a share, for its second quarter ended July 31, up from $3.7 million, or 3 cents per share, a year earlier, on a 49 percent rise in revenue to $263.1 million, broadly in line with Wall Street targets, according to Reuters Estimates..

Salesforce shares were quoted at $59.80 in after-hours trade, down 8.4 percent. Before the news, they had fallen 18 cents to close at $65.30 on the New York Stock Exchange.

The stock of Salesforce was trading at about 58 times the average forecast for the company's 2009 earnings per share as of the close of trade on Tuesday, Thomson Reuters proprietary data showed.

That's far above the price-to-earnings ratio for the world's two biggest publicly held software makers. Microsoft Corp (MSFT.O) is trading at about 11 times its 2009 earnings forecast, while Oracle has a ratio of about 13.

Global Equities Research analyst Trip Chowdhry said the valuation on Salesforce shares will continue to narrow.