August 23, 2012 / 8:23 PM / 5 years ago

Salesforce third-quarter forecast disappoints, shares drop

SAN FRANCISCO (Reuters) - Enterprise software provider Salesforce.com Inc issued a weak third-quarter earnings outlook on Thursday that raised investor concerns about heightened competition from rivals and helped push its shares 5 percent lower in after-hours trade.

The San Francisco-based company beat analysts’ estimates for fiscal second-quarter profit and revenue. But it forecast third-quarter earnings of 31 or 32 cents per share, short of the 34 cents expected by analysts.

A price war is cutting into the software maker’s margins as it faces competition from Oracle Corp and SAP for big corporate clients and Citrix Systems Inc with smaller businesses, said Global Equities Research analyst Trip Chowdhry.

“The competitive environment is getting more intense,” Chowdhry said.

San Francisco-based Salesforce reported a net loss of $9.9 million, or 7 cents a share, for its second quarter, ended July 31, double the $4.3 million, or 3 cents a share, loss from a year earlier. Excluding certain items, it earned 42 cents a share, beating the 39 cents expected on average by Wall Street, according to Thomson Reuters I/B/E/S.

Chief Executive Marc Benioff, a former top executive at Oracle, has invested heavily in recent quarters to expand his company’s social media offerings. Earlier this month, Salesforce closed its $689 million acquisition of Buddy Media, a social media marketing platform.

Shares of Salesforce slid 5.3 percent after hours to $139 after closing at $146.77 on the New York Stock Exchange.

Reporting By Gerry Shih; Editing by Steve Orlofsky and Tim Dobbyn

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