Salesforce.com Goes Public

After two delays, Salesforce.com on Wednesday officially joined the list of publicly traded companies on the New York Stock Exchange, under the "CRM" symbol.

Shares for the San Francisco-based CRM vendor, which delivers its software by subscription, started at $11 at the opening bell. Salesforce.com originally had set a $7.50 to $8.50 range for its stock, but last night it repriced its 10 million shares, bringing it in line with many of the IPOs launched during the dot-com heyday.

And as with most of those earlier IPOs, Salesforce.com has been experiencing revenue gyrations. According to the latest S1 form Salesforce.com filed with the Securities and Exchange Commission, the company has recorded quarterly operating income of up to $4.3 million and quarterly losses as high as $4.9 million over the past two years. Salesforce.com closed out fiscal 2004, ended Jan. 30, with about $96 million in revenue. For its fiscal 2005 first quarter, the software vendor reported earnings of $437,000 on revenue of $34.8 million.

About 40 percent of Salesforce.com's business comes from companies with fewer than 20 employees. That small-business emphasis could pose a problem for the company, which said those subscribers have "higher attrition rates and shorter subscription periods." In fact, Salesforce.com's most recent SEC filing said the company's survival depends on attracting a greater share of the midsize- and large-business market. That upmarket target pits Salesforce.com squarely against the likes of Siebel Systems, San Mateo, Calif., which last year launched its own hosted CRM service in response to Salesforce.com's marketing success.

"Once they are public, they become subject to all of the scrutiny a public company must undergo. So I, for one, am looking forward to their being subject to that financial scrutiny," said Ken Rudin, vice president and general manager of Siebel CRM OnDemand. "For us, the bottom line is this doesn't change our strategy at all."

Salesforce.com has become a marketing phenomenon in almost equal measure for its gregarious CEO, Marc Benioff--who delights in publicly tweaking larger, more established CRM vendors--as for selling CRM software as a service. But Benioff's love of the spotlight was what caused the company's most recent IPO delay.

During the imposed quiet period before a company goes public, Benioff allowed a New York Times reporter to follow his moves throughout a day. And last month, the SEC deemed that Benioff's participation in the resulting May 9 article, "It's Not Google. It's That Other Big IPO," might have violated the Securities Act of 1933. A few days later, Salesforce.com issued an amended SEC filing warning investors that the company could be forced to buy back all of the stocks sold in its first year "at the original purchase price for a period of one year following the date of the violation." In the filing, Salesforce.com also said it would "contest vigorously" such a court ruling.