Salesforce.com Inc (CRM.N) issued a full-year profit outlook at the low end of Wall Street projections as the Web-based software maker plans to increase spending to fuel sales growth.
Salesforce, whose shares fell 5.6 percent in after-hours trading, said profit will also be hurt by costs associated with integrating three acquisitions.
Chief Executive Marc Benioff said he plans to hire aggressively this year so that he has enough workers to meet demand for Salesforce’s business software.
“The time to invest in this company is now,” said Benioff, who founded Salesforce 11 years ago. ” We want to have more capacity. In my opinion this is a distribution-constrained organization.”
Salesforce forecast full-year profit of $1.26 to $1.28 per share, excluding a 13 cents-per-share acquisition-related charge. On that basis, analysts on average had forecast profit of $1.28 per share, according to Thomson Reuters I/B/E/S.
While there was not a big discrepancy between the profit forecast and analysts’ estimates, investors were already jittery after U.S. stocks tumbled earlier on growing fears that the euro zone’s efforts to tackle its sovereign debt crisis would fall short, jeopardizing global economic recovery.
They are particularly cautious about Salesforce because it is among one of the more expensive technology stocks, trading at roughly 49 times the average analyst forecast for next year’s earnings, versus 12 times for Microsoft Corp and 12 times for Oracle Corp.
“People are disappointed with their bottom line guidance,” said Janney Montgomery Scott analyst Sasa Zorovic. “Clearly it’s a disappointment. But should the stock get whacked this much? I don’t think so.”