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UPDATE 3-Salesforce profit, outlook beat expectations
http://www.reuters.com/article/marketsN ... 226?rpc=44
* Q4 EPS 11 cents beats Street view 7 cents
* Sees Q1 EPS 10-11 cents vs Street view 10 cents
* Sees FY09 EPS 54-55 cents, beats Street view of 50 cents
* Deferred revenue ahead of expectations
* Shares rise 5 pct in after-hours trading (Adds CEO comment, earnings details, byline; updates stock)
By Jim Finkle
BOSTON, Feb 25 (Reuters) - Business software maker Salesforce.com Inc (CRM.N) posted quarterly earnings that nearly doubled and gave a full-year profit outlook that topped Wall Street projections, sending its shares up 5 percent in extended trade.
The results and outlook defied expectations among some investors, who thought Salesforce would post weaker-than-expected results due to the slowdown in global technology spending.
Still, company executives said they expect a rise in the percentage of subscriptions to its Web-based business software programs that get canceled this year. That attrition rate has historically been below 1 percent per month.
Chief Executive Marc Benioff declined in an interview to say how much he expects the rate to rise this year, nor specify the rate used to calculate the company's revenue forecasts.
Salesforce books revenue from its multi-year subscriptions quarter-by-quarter over the life of those contracts, and Wall Street pays close attention to the as-yet-unused part, called deferred revenue, as an indication of future business.
"The whisper was that it was a terrible quarter for deferred. There had been some strong negativity surrounding the stock," Wedbush Morgan analyst Michael Nemeroff said.
Salesforce, however, reported that billed deferred revenue rose 24 percent to $594 million for the quarter ended Jan 31. Total deferred revenue, which includes unbilled bookings, rose to $1.3 billion from $1.0 billion a year earlier.
The software maker, whose flagship product helps businesses manage sales activities, said it won several large accounts away from companies that had been using Oracle's Siebel customer relationship management software.
They included hardware maker EMC Corp (EMC.N), which Benioff said is going to move 17,000 workers from Siebel to Salesforce software.
A spokeswoman for Oracle declined to comment. Officials with EMC weren't immediately available for comment.
Salesforce said fiscal fourth-quarter net profit rose to $13.8 million, or 11 cents a share, from $7.4 million, or 6 cents a share, a year earlier. Analysts had expected profit per share of 7 cents, according to Reuters Estimates.
Revenue at the software maker -- which competes with SAP AG (SAPG.DE), Microsoft Corp (MSFT.O), Oracle Corp (ORCL.O) and NetSuite Inc (N.N) -- jumped 34 percent to $290 million, versus the average analyst estimate of $285 million.
Nemeroff said investors were pleased with the San Francisco-based company's revenue outlook because Salesforce is conservative in its sales forecasts and generally reports figures above the high end of its estimates.
Investors have also worried that Salesforce would be forced to boost discounts on its products as the economy weakened, but the software maker said that has not been the case.
"We're of course flexible with how we price with all customers, but we have seen no change," Benioff said.
Salesforce forecast first-quarter profit of 10 to 11 cents per share, versus the average Wall Street estimate of 10 cents. It projected quarterly revenue of $304 million to $305 million, compared with analysts' average forecast of $306 million.
Its full-year profit forecast of 54 cents to 55 cents exceeds analysts' average estimate of 50 cents. It forecast annual revenue of $1.30 billion to $1.33 billion, versus analysts' average estimate of $1.33 billion.
Salesforce shares rose 5 percent to $29.56 in extended trading from their New York Stock Exchange close at $28.10.
The stock hit a 52-week low of $20.85 in November amid concerns that fourth-quarter sales would be weak, causing growth in deferred revenue to slow. (Reporting by Jim Finkle; Editing by Bernard Orr, Richard Chang)