Salesforce earnings: Software outage and resulting rebates could hit outlook

Salesforce.com Inc.’s outlook will be closely watched when it reports results from a seasonally weak quarter on Tuesday, with a large service outage expected to trim some of the results from the current period.

is expected to show it powered through one of its seasonally weaker quarters with solid results when it reports earnings but analysts say the customer relationship management software company will have to address its outlook and a large service outage that occurred recently.

Salesforce CRM, -2.73%  is scheduled to report first-quarter results after the market close on Tuesday, nearly three weeks after the company experienced a major outage on May 17. While the outage only lasted a few hours, some customers were affected for days.

“Discussions with some customers indicate that the outage resulted in disrupted service for three days (Friday, Saturday, and Sunday),” said Jefferies analyst John DiFucci, who has a buy rating and $189 price target, in a recent note.

“We also note that salesforce.com provided credits to these customers for three days of subscription revenue,” DiFucci said. “This could potentially impact up to 3% of subscription revenues for the upcoming fiscal second quarter (assuming three days of subscription revenue).”

Also expect executives to revisit the acquisition of Salesforce.org, which is expected to result in a $200 million profit hit in the second quarter. Salesforce stock has slipped over the quarter amid that acquisition news, leading some analysts to believe there is investor fatigue with regard to growth software vendors.

What to expect

Earnings: Of the 37 analysts surveyed by FactSet, Salesforce on average is expected to post adjusted earnings of 61 cents a share, down from the 74 cents a share reported in the year-ago quarter. Estimize, a software platform that uses crowdsourcing from hedge-fund executives, brokerages, buy-side analysts and others, calls for

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