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UPDATE 2-Salesforce's $835 mln quarterly revenue tops forecasts

By Gerry Shih

Feb 28 (Reuters) - Salesforce.com Inc on Thursday reported better-than-expected quarterly sales of $835 million, backed by strong sales of its cloud-based services.

Shares gained 4.9 percent after hours to $177.50, after closing up 1.4 percent at $169.22 on the New York Stock Exchange.

The company, which provides sales and marketing software to companies like Coca-Cola and Ford Motor, has boasted one of the fastest rates of top-line growth in the technology industry, with its full-year revenue rising 35 percent from a year ago to $3.05 billion.

For its 2014 fiscal year, which began Feb. 1, Salesforce said it expected sales to continue growing to between $3.82 and $3.87 billion, in-line with Wall Street forecasts of $3.85 billion, according to Thomson Reuters I/B/E/S.

Under Marc Benioff, Salesforce's ebullient CEO and founder, the company's record of red-hot revenue growth has won favor among Wall Street investors, who have driven up its share price to roughly 100 times forward earnings, one of the highest multiples in the tech sector.

But questions are mounting over how long the 14-year-old company can keep its shares soaring, especially considering Benioff's glaring failure to produce consistent profits.

Considered the leader in cloud computing, Salesforce is facing rising competition from Oracle Corp, SAP AG , and Microsoft Corp, who are intensely pursuing Salesforce's customers and making splashy acquisitions to match Salesforce's product offerings.

In recent years, Benioff has steered his company to cater more to marketing rather than sales departments. Through acquisitions and internal research and development, Salesforce has, for instance, introduced tools that automate social media ad campaigns or monitor Twitter chatter.

Benioff said on Thursday's earnings call that his company sold new service contracts to Philips Electronics, Unilever, Intuit Inc and others.

The quarter, Benioff told analysts with typical salesmanship, was "pretty epic."

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Despite soaring revenue, Benioff, a one-time sales executive at Oracle, has often been criticized for delivering underwhelming bottom lines. Salesforce reported another quarterly loss on Thursday: a net loss of $20.8 million or 14 cents a share for the fourth quarter, widening from a loss of $4.08 million or 3 cents a share a year earlier.

The company said that $108 million in stock-based compensation expenses and a one-time tax charge had eaten into its margins. Excluding those and other items, it earned 51 cents a share, beating the Street's estimate of 40 cents.

Benioff, who made a series of major acquisitions in 2012, including a $745 million deal for Buddy Media, a social media marketing software company, said on Thursday he would continue to invest heavily to expand his product line.

"I think we're going to buy small and big," Benioff said. "We're going to be aggressive. We need to look at everything."

Although Salesforce has won new customers and headlines with its expanded product strategy, the early results of its aggressive expansion are still unclear. The company disclosed in October that Buddy Media was losing money at a rate of $40 million a year, and Chief Financial Officer Graham Smith said Thursday that Buddy Media contributed just $11 million to Salesforce's fourth quarter revenue and $20 million for the year.

Benioff suggested that mobile software will be a key part of the expansion. The company this week introduced new capabilities in its customer service software so representatives could talk to customers in mobile apps.

"We pioneered the shift to the cloud, we pioneered the shift to social, and we pioneered the shift to mobile," Benioff said.