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TheStreet Open House Outage Strikes Again

Updated from 2:38 p.m. EST (CRM - Get Report), which suffered a widespread service outage two weeks ago, experienced another, though apparently smaller, snafu on Thursday.

An internal company memo viewed by indicates that customers in Europe, Asia Pacific and North America were affected for several hours.

The outages are serious since they cast doubt on the company's ability to ensure that customers can access critical sales and customer data at any time.

"With three weeks to go in the fiscal year, this outage could not have come at a worse time for sales guys trying to close business," said SG Cowen analyst Peter Goldmacher in a note to clients. "Our checks so far have revealed a lack of large deals this quarter and we expect this second outage to cause a material delay in January close rates."

The analyst added, however, that he still sees Salesforce as "the best growth story in software" and recommends it for longer-term investors. His company does not have an investment banking relationship with Salesforce.

Salesforce spokesman Bruce Francis acknowledged Thursday's episode and said, "there's no thing as a minor outage because we know that even one moment of degraded availability is a moment our customers can't do what they need to do."

Late last year, Salesforce opened two new data centers which were designed to minimize service disruptions. Francis said that while the centers are open, the infrastructure tying them together is not yet fully operational. He declined to say when the company expects to finish the project.

The news did nothing to dampen the enthusiasm of investors for the stock. Spurred by an upgrade earlier Friday from CSFB, the stock soared $3.77, or 10.5%, in recent trading to a new 52-week high of $39.83.

Salesforce, a leader in the burgeoning "on-demand" category, provides software that helps manage customer data; but unlike traditional software suppliers who sell licenses, it hosts the applications on its own servers and charges for a service.

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