Salesforce profit forecast misses estimate amid acquisition push

Staff Writer
Columbus CEO

(c) 2013, Bloomberg News. forecast fiscal fourth-quarter profit that may miss analysts' estimates on higher compensation costs as the biggest maker of customer- management software expands into new markets.

Revenue for the period ending in January will be $1.12 billion to $1.13 billion, and profit excluding some items will be 5 cents to 6 cents a share, the company said in a statement today. That compared with analysts' average projections for profit of 7 cents on sales of $1.12 billion, according to data compiled by Bloomberg.

Chief Executive Officer Marc Benioff, who is hosting the company's Dreamforce customer conference in San Francisco this week, has spent more than $3 billion to acquire marketing- software companies, including ExactTarget Inc. for $2.42 billion in July. The marketing push isn't yet paying off amid competition from Adobe Systems Inc. and others, according to Peter Goldmacher, an analyst at Cowen & Co.

"They have a pretty dismal track record on M&A," said Goldmacher, who has the equivalent of a sell rating on the stock.

Shares of Salesforce fell in extended trading after declining 3.1 percent to $55.51 at the close in New York. The stock has climbed 32 percent this year, compared with a 19 percent gain in the Standard & Poor's 500 Information Technology Index.

Benioff is competing with Microsoft Corp., Oracle and SAP in the $20.7 billion market for technology that lets companies manage their customers, while adding newer tools for marketing and client support.

For the fiscal third quarter, Salesforce reported sales of $1.08 billion, up 36 percent from a year earlier, compared with analysts' average estimate for $1.05 billion. Profit excluding some items was 9 cents a share, matching the 9-cent projection.

Including stock-based compensation costs, amortization and interest expenses, the company's net loss narrowed to $124.4 million, compared with the average prediction for a loss of $111.5 million.

Salesforce today introduced an overhauled version of its mobile software, seeking to ensure clients and partners will be able to use more features of the company's sales, marketing and customer-service programs.

Called Salesforce1, the new tool will make it easier for businesses to customize's services for smartphones and tablets, the San Francisco-based company said in a statement Monday. Application developers will also get new tools to tap into the platform.