Salesforce.com Lowers Forecast, Gets Smacked

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Salesforce.com Inc. (NYSE: CRM) reported adjusted second quarter EPS of $0.42 on $732 million in sales after markets closed today. In the same period a year ago, the customer relationship management firm reported EPS of $0.30 on revenue of $546 million. Second-quarter results compare to the Thomson Reuters consensus estimates for EPS of $0.39 and $728.3 million in revenue.

On a GAAP basis, Salesforce.com reported an EPS loss of $0.07, which incldes stock compensation expense of $85 million, a $20 million charge for amortization of purchased intangibles, and a $6 million non-cash interest expense charge related to the company's senior notes.

The company's chairman/CEO said:

Our second quarter revenue growth was outstanding at 34% in dollars and 37% in constant currency. Salesforce.com's social enterprise strategy is enabling companies to connect with customers, partners, and employees in completely new ways - and it's creating new opportunities for their growth and ours.

Salesforce.com guided third-quarter revenue at $773-$777 million and adjusted EPS to $0.31-$0.32. On a GAAP basis, the company forecasts a net loss of $0.26-$-0.27 per share. The consensus estimate calls for adjusted EPS of $0.34 on revenue of $771.3 million.

For the full fiscal year, the company forecast revenue at $3.025-$3.035 billion and adjusted EPS at $1.48-$1.51. On a GAAP basis, Salesforce.com expects a net loss per share of $0.72-$0.75. The consensus estimates call for adjusted EPS of $1.49 on revenue of $3.02 billion.

The roughly inline forecasts and the slightly better-than-expected results hardly justify the company's Everest-like forward P/E ratio of 73.75. The company certainly isn't looking for that kind of growth so it's reasonable to wonder what analysts are seeing that's hidden from everyone else. Perhaps the lower earnings forecasts will shake things up some.

Shares are down about 6.6% in after-hours trading at $137.20. The current 52-week range is $94.09-$164.75. Thomson Reuters had a consensus analyst price target of $165.91 before today's results were announced.

Paul Ausick


Filed under: 24/7 Wall St. Wire, Earnings, Software, Technology Companies Tagged: CRM, featured
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