Salesforce.com Sets $8 Price Target For IPO

The price target set in Securities and Exchange Commission documents filed Tuesday values the 5-year-old company at $800 million.

Salesforce.com didn't establish a timetable for completing its IPO of 10 million shares, but companies typically complete the process within a month after the projected price is revealed. The final price of the IPO sometimes fluctuates depending on investor demand.

Saleforce.com's IPO ranks among the most eagerly awaited since the Internet bubble burst as venture capitalists and entrepreneurs gauge Wall Street's appetite for trailblazing tech companies.

If Salesforce.com's stock market debut is well received, other startups may be encouraged to pursue IPOs.

The San Francisco-based maker of customer management software filed its IPO papers four months ago, but the transaction has been on hold while the company hashed out accounting issues with the SEC.

Salesforce.com apparently resolved the dispute by restating its fiscal 2002 and 2003 results, changing the way that it accounted for some of its sales commissions. The revisions increased its combined loss for those two years by $8.7 million.

Under the leadership of former Oracle Corp. executive Marc Benioff, Salesforce.com became profitable in the year ending in January, earning $3.5 million on revenue of $96 million.

Salesforce.com overcame Silicon Valley's recent economic turmoil by pushing a new concept for selling software.

Instead of charging a one-time license that allows companies to install software on individual computers, Salesforce.com relies on monthly fees that enable subscribers to use the software from any computer with Web access.

Many traditional software companies ridiculed Salesforce.com's approach as a doomed idea, but the method has been gaining thousands of converts. Through January, Salesforce.com had 8,700 customers, providing access to 127,000 subscribers.

Breaking the software mold has turned into a potential gold mine for Benioff, 39. His stake in Salesforce.com will be worth $225 million if the IPO is priced at $8 per share.

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