NEW YORK (AP) — Shares of Salesforce.com jumped to an all-time high Friday following the cloud computing company's strong second-quarter results and its increased sales forecast.
THE SPARK: The San Francisco made its quarterly report after the market closed Thursday. Salesforce.com said demand for its software improved, and it reported adjusted net income of 9 cents per share. Its revenue grew 31 percent to $957.1 million. Both totals surpassed Wall Street estimates.
THE BIG PICTURE: Salesforce.com Inc. now expects $4 billion to $4.03 billion in revenue for the fiscal year, up from its previous estimate of $3.84 billion to $3.88 billion. FactSet says analysts expect $4 billion on average.
The company said it will report net income of 32 to 34 cents per share excluding one-time items, down from its previous estimate of 47 to 49 cents per share. Salesforce is expecting greater costs related to stock-based compensation and amortization. Analysts are projecting net income of 33 cents per share.
Salesforce took a loss in the first quarter as its marketing costs grew by almost $100 million, but sales rose 28 percent.
Salesforce has been able to post strong quarterly results and repeatedly raise its forecasts. It has won over corporate converts to its method of selling software in monthly subscription packages instead of charging a big upfront fee to install the programs on individual computers kept in a customer's office.
THE ANALYSIS: Citi Investment Research analyst Walter Pritchard said some investors thought the company's sales were slowing down, but its growth appears to be stable. He has a "Buy" rating on Salesforce shares and a price target of $50.
Jefferies & Co. analyst Ross MacMillan said the company's revenue guidance looks conservative and Salesforce might be able to surpass its net income guidance as well. He maintained a "Buy" rating on the stock with a price target of $52 per share.
SHARE ACTION: Salesforce stock climbed $5.53, or 12.7 percent, to $49.18 in morning trading. Earlier the shares peaked at $49.75. They have risen 14.3 percent since the end of June.