Salesforce Has Something to Be Thankful For

SAN FRANCISCO -- Although Salesforce.com(CRM Quote) is feeling the economy's pinch, it should weather recessionary trends better than most tech companies.

The San Francisco-based developer of subscription software will report third-quarter results Nov. 20. Analysts expect year-over-year revenue growth of 42% to $273.6 million and earnings of 7 cents a share -- two pennies better than the same quarter of 2007, when revenue growth was 48%.

For the fiscal year, analysts project a top line of $1.1 billion and EPS of 30 cents, according to Thomson Reuters.

IDC cut its 2009 worldwide IT growth forecast Wednesday by more than half, to 2.6%, and its U.S. projection to 0.9%, from a prior forecast of 4.2%.

Despite compressed revenue estimates for most of the tech sector, sell-side analysts project Salesforce to show earnings growth of 90% on top-line growth of 27% for the next fiscal year. The consensus estimate calls for EPS of 57 cents on revenue of $1.4 billion in fiscal 2010, which begins in February.

Macroeconomic turmoil is rapidly changing forecasts, Gartner analysts say. "The software markets are in pretty good shape vis-a-vis the rest of the market, although I expect our next forecast will be more cautious," says analyst Sharon Mertz.

Web-hosting software companies such as Salesforce may face slower growth like the traditional vendors they seek to replace. But it is more likely to benefit from frozen IT budgets because selling subscriptions requires less upfront money, says Gartner analyst Michael Maoz.