SAN FRANCISCO (

TheStreet

) --

Salesforce

(CRM) - Get Report

shares took a nosedive Wednesday morning, after the company announced it would continue hiring at a steady pace in the fourth quarter, adding to costs.

Shares skidded down 5.06% to $62.29 a share as they changed hands in morning trading. As investors offloaded their shares, volume spiked, nearly doubling the annual average daily volume of 1.6 million shares within the first 90 minutes of trading.

The company says it took on board around 160 new employees in the third quarter as the company's customer base continued to grow. It will keep up with this level of hiring in the current quarter, adding a total of 3,800 employees. An analyst at FBR Capital Markets noted that the ramp-up in hiring was reflected in third-quarter results.

The cloud-computing pioneer announced yesterday that it has doubled its net income for the third quarter, as its long list of customers continues growing faster than ever.

Net income for the quarter climbed to $20.7 million or 16 cents a share. It was a sharp rise from last year's net income of $10.1 million or 8 cents a share, and in line with analysts estimates.

The company added nearly 5,000 customers in the third quarter, increasing its client base to almost 70,000, while citing low attrition. It now has major data centers in the West Coast, East Coast and Singapore.

Revenue rose 20% to $331 million. International revenue flowing from Europe and Asia reached 30% of the company's total revenue. Salesforce increased hiring in the third quarter to position itself for growth in the fourth quarter.

Subscription and support revenues came in at $306.9 million, a 21% gain over the previous year. Deferred revenue rose to $545.4 million, 16% higher than the same time last year, reflecting an increase in new sales.

Company executives say that the growth of cloud computing is clearly outpacing traditional web-hosting platforms. Customers have built 10,000 web sites with Salesforce.com, generating 170 million page views.

Investors' optimism about the company is partly fueled by excitement over a new product that Salesforce and

Cisco

(CSCO) - Get Report

will jointly release in January. With Salesforce's strength in online customer relationship management and Cisco's dominance in the networking arena, they are working to create a service that will allow call centers to connect with customers and resolve their queries over the Internet.

Since its inception in 1999, the San Francisco-based company has steadily gained a reputation for being a pioneer of software development, particularly in the area of customer service. As of July, Salesforce has managed customer information for well-known companies like Allianz Commercial, Dell, Dow Jones Newswires and Kaiser Permanente.

-- Reported by Andrea Tse in New York

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