Salesforce Skyrockets on Successful Marketing Bet

Jacob Harper |

Tech company Salesforce.com ($CRM) issued their second quarter 2013 earnings report and shattered analyst expectations. Salesforce posted healthy revenues and raised guidance for the year, erasing worry the company had taken on too much risk with a recent major acquisition.

Salesforce, who had previously specialized in customer-management software and cloud computing, expanded into marketing with the $2.5 billion purchase of e-marketer ExactTarget Inc. in June. Analysts expected Salesforce to take a loss this quarter based on their high spending and concerns over billing numbers, but the company actually ended up posting a profit, beating expectations by 17 cents a share. Revenues from ExactTarget are expected to hit $145 million on the year.



Salesforce has been on a buying spree the last two years. Last year they bought social media managing company Buddy Media for $689 million. The year prior, they bought Facebook Inc. (FB) and Twitter tracking company Radian6 for $326 million. Though Salesforce had been taking on a lot of debt to make these purchases, the bets are paying off, as the company is already once again profitable.

The stock has had a rough year. In the first quarter of 2013, the ExactTarget deal especially worried investors, as that quarter’s earnings greatly disappointed, and the company lost over 10 percent of its value.

But this quarter has been a different story, and has renewed the bulls' faith in the long-underperforming tech giant. For their second quarter 2013 earnings, Salesforce reported a net profit of $76.6 million, or $0.09 per share, versus the net profit of $13.3 million, or $0.42 per share, from the same period a year ago. Revenue for the quarter was $957.1 million, as compared to $732 million from the previous year. Analysts were expecting a loss of -$0.08 per share on revenues of $938.9 million.

While Salesforce is only up 3.9 percent on the year, on Friday the company posted its largest intraday gain ever. They rose 13.88 percent to hit $49.71 a share.

(image courtesy of Wikimedia)

DISCLOSURE: The views and opinions expressed in this article are those of the authors, and do not represent the views of equities.com. Readers should not consider statements made by the author as formal recommendations and should consult their financial advisor before making any investment decisions. To read our full disclosure, please go to: http://www.equities.com/disclaimer

Companies

Symbol Name Price Change % Volume
CRM Salesforce.com Inc 98.90 1.71 1.76 4,588,757 Trade
FB Facebook Inc. 174.98 0.42 0.24 12,602,238 Trade
HNDI Handeni Gold Inc 0.04 0.00 0.00 0

Comments

Emerging Growth

Cavitation Techs Inc

Cavitation Technologies Inc engineers and designs Nano technology based systems that have potential applications in industrial liquid processing.

Private Markets

Voleo

Voleo is a free download that allows you to form investment clubs with your friends, family, colleagues, classmates, teammates…basically anyone you know and trust. Invest and manage a stock portfolio…

iPRO Network, LLC

We provide the platform, tools, and resources to empower individuals and professionals to market desirable goods and services to the public, taking the place of traditional methods of commerce.