Salesforce Shares Crash After Earnings Disappoint

Shares of Salesforce.com ended the day down by more than 5 percent a day after the company reported earnings that fell short of expectations.

Salesforce shares closed at $43.25 a share, down $2.44, or 5.25 percent. Yesterday the company said it earned 10 cents a share on a non-GAAP basis on sales of $893 million. Both figures were short of consensus forecasts by analysts, which called for 12 cents in EPS and revenue of $935 million. Gross margins fell slightly, while operating expenses rose by 29 percent. The company said it expects full-year non-GAAP earnings of 47 cents to 49 cents per share and sales in the range of $3.84 billion to $3.88 billion, up slightly from prior guidance. CEO Marc Benioff has been saying the company is getting close to recording its first $4 billion year.

Most analysts today, including those at Stifel Nicolaus, Lazard Capital, Oppenheimer and Barrington, looked at the price drop as a buying opportunity. Most but not all. One analyst, Steve Koenig of Wedbush Securities, took the opportunity to cut his rating on Salesforce. Salesforce is a sufficiently large company that it can now be affected by overall shifts in the IT spending budget, Koenig argued.

One problem the company said it experienced was currency headwinds, specifically regarding the Japanese yen. As he does every quarter, CEO Marc Benioff appeared on CNBC’s “Mad Money with Jim Cramer.” The deflationary trends on the Japanese yen are hurting payments to Salesforce when they get converted to U.S. dollars, and Benioff said during the segment that Japan has become Salesforce’s largest customer. Previously that distinction had been held by Hewlett-Packard.