Salesforce.com Eyes 10 Million-Share IPO

Salesforce.com will sell 10 million shares at between $7.50 and $8.50 a share, according to a regulatory filing on Tuesday. The company has not yet announced a sale date for one of the most eagerly awaited public offerings of the year.

The total sale -- $85 million at the top of the range -- is 26% lower than the $115 million the company told investors to expect when it filed its initial intention to go public in December 2003.

"I wouldn't read too much into that," said David Menlow, president of IPOfinancial.com, a service that helps price initial public offerings. "Remember, the company is only selling 10% of the available stock, and the market is significantly different than it was late last year."

When it does go public, Salesforce.com will trade on the New York Stock Exchange under the symbol CRM, which stands for customer relationship management software, the product it sells.

Unlike conventional business software, Salesforce.com's product runs over the Web, and, most importantly, is very cheap. Salesforce.com delivers software that tracks customer accounts and automates the sales process for $65 to $125 a month per employee, instead of about $2,500 per employee over the life of a contract charged by its competitors.

Although Salesforce.com is much smaller than its major conventional rival -- Siebel Systems ( SEBL) -- it already has forced the older company to sell a cheaper, Web-based version of its software. In fact, subscription-based software is also seen as a potential threat to the business models of other old guard software companies.

In fiscal 2004, Salesforce posted revenue of $96 million, nearly twice the $50.9 million reported the year before, according to the filing.

The underwriting syndicate for the offering includes Morgan Stanley, Deutsche Bank Securities, UBS Securities, Wachovia Capital Markets and William Blair & Co., according to the firm's prospectus.

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