Salesforce.com shares fall as company ramps hiring

AP News
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Posted: Nov 18, 2009 9:53 AM

Shares of Salesforce.com Inc. slid Wednesday morning as the company signaled it intends to keep hiring, which will likely push up costs.

Salesforce.com, which provides software to help companies manage customer relations, said late Tuesday that its third-quarter profit more than doubled from the year before, matching Wall Street forecasts. But it also recorded rising expenses.

In a conference call with analysts, Salesforce.com said it hired about 160 people in the third quarter, bringing its work force to roughly 3,800. The company said it plans to keep up that rate of hiring in the fourth quarter.

The bigger head count was reflected in third-quarter results, FBR Capital Markets David Hilal told clients in a note.

Hilal said the San Francisco company needs to turn a better profit given its revenue and stock valuation. He reiterated a "Market Perform" rating on shares.

Lazard Capital Markets analyst Joel Fishbein, took a more upbeat view, maintaining a "Buy" rating and telling clients in a note that "Salesforce.com is executing very well in its core business" and "is well positioned for long-term growth."

The company said it signed up 4,700 new customers during the quarter, bringing its total to 67,900.

Salesforce.com shares fell $2.67, or 4.1 percent, to $62.94 in morning trading. The stock has ranged from $20.82 to $67.72 over the past year.