Hosted CRM service provider Salesforce.com acknowledged in a Securities and Exchange Commission filing Friday that it is in a “cooling off” period after a possible violation of the SEC-mandated quiet period before the companys planned IPO.
While Salesforce.com Inc. filed an amendment to its Form S-1 IPO registration statement Friday, the IPO, originally thought to be planned for March, has been delayed indefinitely.
The San Francisco-based companys latest IPO troubles center around a May 9 story in The New York Times, which previewed the companys impending IPO.
The article tracked the companys history and the current state of the hosted CRM market. Company CEO Marc Benioff was interviewed for the article, though he did not comment specifically on the pending IPO, which at the time was scheduled for May 23.
About a week and a half after the Times article appeared, published reports indicated that the Salesforce.com IPO had been delayed as a result of the article.
The IPO had been delayed earlier as the company reconciled some accounting issues related to the expensing of sales commissions and the amount of company stock Benioff owns, according to published reports.
In Fridays SEC filing, Salesforce.com acknowledged that it stopped the IPO process May 13 and entered a “cooling-off” period so that any effects that the Times article and other media reports would have on the IPO would “dissipate.”
“While some of the factual statements about Salesforce.com in the article are disclosed in this prospectus, the article presented statements about our company in isolation and did not disclose many of the related risks and uncertainties described in this prospectus,” said the company statement filed Friday with the SEC.
If Salesforce.com is found to have violated its quiet period, provided for in Section 5 of the Securities Act of 1933, it could be required by a federal court to repurchase shares from investors at the original purchase price for one year from the date of the alleged violation, according to the statement filed Friday.
“We would contest vigorously any claim that a violation of the Securities Act occurred,” the companys Friday statement said.
Salesforce.com has no further comment on the IPO or on the amended registration statement, said a company spokeswoman.
Mike Doyle, CEO of Salesforce.com rival Salesnet Inc., was sympathetic to Benioff. Doyle took Standish Care Co., which he founded, public in 1992—the first company providing assisted living service to go public, he said.
“Having been through this process myself, I can tell you its difficult,” Doyle said in Boston. “A cooling-off period for [Benioff] is almost an oxymoron.”
Doyle said the talkative Benioff had better get used to the scrutiny his every pronouncement will be under as a public company, when those words will be able to move his companys stock price. Quiet periods leading up to earnings releases are also de rigueur for public companies, he pointed out.
“You wont want to completely muzzle [Benioff], though,” Doyle said. “Hes done a good job of evangelizing for this industry.”
Doyle said the Salesforce.com IPO will happen eventually and that theres nothing in Fridays registration statement to indicate otherwise.
The company said it expects to sell 10 million shares, priced between $7.50 and $8.50 per share.
Doyle said he will be watching closely.
“Their IPO will be a very important data point for us,” he said. “An IPO is something were considering. A lot of our decision will be based on the success of Salesforce.coms IPO.”
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