Salesforce.com
May Be Ready
To Go to Market
False Starts Tripped Up
Much-Anticipated IPO;
Modest Terms Were Set
By RAYMOND HENNESSEY
DOW JONES NEWSWIRES
June 21, 2004; Page C4
NEW YORK -- After a few false starts, salesforce.com Inc. may finally make it to the public markets.
What began as a much-anticipated initial public offering for salesforce fizzled a month ago when the Securities and Exchange Commission mandated a 30-day cooling-off period, during which time the company couldn't market its IPO. That was prompted by an interview the company's chief executive, Marc Benioff, gave to the New York Times in May.
Salesforce.com, a San Francisco maker of customer-relationship software, also was forced to refile its offering documents with the SEC to disclose that the interview might have been a violation of securities law, since public comments around a stock offering are strictly regulated. If indeed the company did run afoul of securities law, it could be forced to rescind the deal and buy back shares, though such a scenario rarely plays out.
It wasn't the first problem with the deal. Before underwriters, led by Morgan Stanley, began marketing the offering to potential investors for the first time in April, salesforce.com restated its past results, saying it erred in its prior accounting treatment.
Whether the problems with the deal will affect investor sentiment toward the IPO remains to be seen. But, from the start -- even before the cooling-off period -- salesforce.com set very modest terms on the offering. Its first IPO filing, made in December, suggested the company would sell $115 million of stock. However, it ultimately filed to sell 10 million shares at between $7.50 and $8.50 a share. At the midpoint of the range, that values the offering at just $80 million.
Even so, the company, which would come to market with a market capitalization of around $800 million, may be too pricey, given its financial results, says Francis Gaskins, president of IPODesktop.com, a research firm in Brentwood, Calif.
The reason is that the company's stated results are probably going to be different very soon because, unlike some other IPO candidates, salesforce.com doesn't expense stock options -- something the company will likely have to do starting in January if new requirements on options expensing are approved by accounting rule makers.
Such a change would wipe out all the profits salesforce.com has recently posted.
The company plans to list its shares on the New York Stock Exchange. |
