Salesforce.com 4Q Net Down 46%, Revenue Growth Continues

Salesforce.com (CRM) is spending heavily to makes it cloud computing environment for businesses into a social environment, as well to continue its rapid sales growth.

Chief Executive Marc Benioff told analysts on the company's earnings call the goal was to make its software-as-a-service business model into one that was more "social, open and mobile" to take market share away from competitors, including Microsoft Corp. (MSFT).

"We see social computing as strategic new enterprise category" that Salesforce.com wants to integrate into its existing suite of software.

The company invested heavily in Chatter last year, which provides a private social network for users of any Salesforce.com product. Salesforce.com recently acquired a company called Dimdim for $31 million, to add online meeting and seminar abilities to the Chatter service.

The goal, Benioff said, is to make Chatter a communication utility for clients and deliver a blow to companies such as Cisco Systems Inc. (CSCO) and Citrix Systems Inc. (CTXS) and their respective Internet meeting products WebEx and GoToMeeting.

Benioff said more than 85% of the company's 92,300 paying customers have deployed Chatter since its release in June.

Salesforce.com Inc.'s (CRM) fiscal fourth-quarter profit fell 46% on surging costs and stock-based expenses, but the company's strong revenue growth continued.

Shares rose 8.6% to $145.85 in after-hour trade as core results beat the company's forecast and it gave upbeat top-line guidance. The stock is up about 93% over the past 12 months.

Salesforce.com forecast current-year earnings of $1.35 to $1.38, falling short of the $1.39 most recently forecast by analysts in a Thomson Reuters poll. But the company raised its revenue prediction to $2.03 billion to $2.05 billion from $1.97 billion to $2 billion.

For the current quarter, it forecast a profit of 26 cents to 27 cents a share on $480 million to $482 million in revenue. Analysts were expecting 31 cents and $471 million, respectively.

Salesforce.com, which specializes in on-demand software that helps manage customer information about sales, marketing and customer support, has continued to post strong sales gains, though costs have weighed on its bottom line amid a hiring push in recent quarters.

It recently unveiled Database.com, an on-demand database program that was set to launch this year, and has been talking up Chatter, a collaboration tool with a Facebook-like interface, as a growth driver.

San Francisco-based Salesforce.com reported fourth quarter net income of $10.9 million, or 8 cents a diluted share, down from $20.4 million, or 16 cents a diluted share in the prior year. Excluding stock compensation expense and non-cash interest and a acquisition expense the company reported income of $43.1 million or 31 cents a share.

Revenue for the quarter totaled $456.8 million, up 29% form the prior year.

Operating costs jumped 40% as the company spent more on research and development, marketing and overhead.

Subscription and support fees, which account for the bulk of Salesforce.com's revenue, climbed 31%. The company's deferred revenue increased by a third. The closely watched metric indicates the number of new sales during the quarter.

Salesforce.com added 5,100 net new customers during the quarter for a total of 92,300, up 27% from a year earlier. For the year, Salesforce.com reported net income of $64.5 million, or 47 cents a share, down from $80.7 million or 63 cents a share in the prior year. Excluding stock compensation expense and non-cash interest and acquisition expense the company reported income of $166.1 million, or $1.22 a share.

For the year revenue totaled $1.55 billion, up 28 from the prior year.

-Steven D. Jones, Dow Jones Newswires; 360-834-1865; steve-d.jones@dowjones.com.

--Matt Jarzemsky contributed to this story.

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