Salesforce.com shares debut strongly
Published: 23 Jun 2004 15:50 BST
In a highly watched initial public offering, shares of Salesforce.com debuted on Wednesday with a big jump from the price set just a day earlier.
Salesforce shares began trading at $15 (£8.25) on the New York Stock Exchange under the "CRM" ticker. That's 36 percent above the company's IPO price of $11 a share, set on Tuesday, when it raised $110m from investment bankers.
On hand to ring the opening bell for the stock exchange was Marc Benioff, Salesforce's chief executive. For Benioff, the moment capped a lengthy process to take his company public, after the Securities and Exchange Commission had forced a pair of delays to address concerns about accounting methods and a profile of Benioff that appeared in The New York Times.
Salesforce first filed its IPO plans in December.
The IPO is seen as a test of a new business model that could shake up the software industry. The company uses a subscription-based method to sell software that businesses install to help manage their customer relationships, a sales model that's gaining popularity among corporate buyers. Analysts predict that the success of Salesforce's subscription model and others like it could pose a challenge to old-guard software companies, including SAP, Siebel Systems, PeopleSoft and Oracle.
Investors also apparently favour the company's model, showing strong demand for the IPO shares prior to the stock's debut. When Salesforce set its IPO price on Tuesday, it exceeded the high end of its pricing range of $9 to $10 a share, which itself had been raised earlier in the day.
Analysts say that Salesforce may help to reignite the beleaguered tech IPO market, which has fallen on particularly hard times since the Internet bubble burst. In addition to Salesforce.com, there are another 16 IPOs across all industries that are scheduled to price this week, which would mark the busiest period since August 2000, according to Richard Peterson, chief market strategist for Thomson Financial.
The impending IPO of search leader Google also has captured widespread attention.
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