Salesforce.com Inc CEO Mark Benioff had the embarrassment of ringing the closing bell of the New York stock exchange this week on the very day his company’s stock fell 27.15% to $11.70.
Investors took fright on Wednesday after the company told a meeting of analysts that it expected net income of break-even to $0.03 a share on revenue of between $160m and $165m. Analysts polled by Reuters had been predicting earnings of $0.06 a share on revenue of $175m.
The slump in the share price came only a month after Salesforce held one of most successful IPOs of the year. After being priced at $11, the shares surged more than 56% on the first day of trading to close at $17.20.
In fact, the company’s forecast for 2004 is in no sense a profit warning and officials insist that they had been using the figures internally but had not disclosed them until it came out of the quiet period surrounding its IPO. It insisted the analysts had not spoken to the company before coming up with their figures.
Salesforce.com’s revenue forecast show it expects to triple sales this year, with its on-demand CRM application service still providing growth that most other software companies can only envy.
Yesterday, Salesforce’s shares recovered 11% to close at $12.98.