February 5, 2009 / 8:17 PM / 11 years ago

Salesforce.com lays off 2 senior execs - sources

NEW YORK/BOSTON, Feb 5 (Reuters) - Business software maker Salesforce.com Inc (CRM.N) has laid off two senior executives, people familiar with the matter said, as technology companies brace themselves for a drop in tech spending this year.

The world’s biggest provider of software delivered over the Internet laid off Gary Hanna, executive vice president for enterprise sales, and another executive vice president, said two people who declined to be identified.

Company spokesman Gordon Evans declined to comment. Hanna could not be reached for comment.

Analysts said the layoffs may be part of a broader move by Salesforce to lower costs amid concerns that sales will slow this year as business clients cut jobs and reduce spending on tech products.

Seven out of 10 chief financial officers at technology companies expect revenue to decrease or remain flat this year, according to a new BDO Seidman 2009 Technology Outlook Survey of 100 executives at top U.S. tech companies.

Salesforce’s flagship product is its customer relationship management software, delivered to companies on the software-as-a-service (SaaS) model.

The San Francisco-based company charges customers on a pay-as-you-go basis, unlike traditional software providers, which charge upfront.

But as companies across the board cut costs and scale back on IT spending amid the wide economic slump, Salesforce could be seeing the size of its contracts shrink.

It’s “quite likely that Salesforce customers have been canceling subscriptions in recent weeks,” one of the sources said, adding that the two layoffs were not “performance-related.”

Trip Chowdhry, an analyst with Global Equities Research, said Salesforce’s move to downsize its executive suite is a sign the company is not as confident about its outlook as it was after its October quarter.

Some of the software maker’s customers, who generally buy its products via subscriptions that are renewed once a year, are likely cutting the size of their deals with Salesforce as they lay off workers. The company’s fees are based on the number of employees who use the software.

“Our research indicates that this quarter was quite challenging. The bookings are probably down,” Chowdhry said. “2009 will be an excruciating year for Salesforce.”

Salesforce officials declined to comment on fourth-quarter results or the outlook for the coming year, saying the company is in a quiet period prior to releasing results later this month after their fourth quarter ended Jan. 31.

Wall Street analysts are expecting Salesforce to earn 18 cents per share for the fourth quarter on revenue of $285.5 million, compared with earnings of 13 cents per share on revenue of $216.9 million in the year-ago quarter. (Reporting by Anupreeta Das and Jim Finkle; Editing by Richard Chang)

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