SAN FRANCISCO — Salesforce.com Inc. is buying the marketing company Buddy Media for $689 million in a deal that underscores the growth in both social media and the delivery of software over the Internet.
As more companies promote themselves on Facebook, Twitter and other social media, Salesforce has been looking to add more products that can help its customers manage their marketing campaigns. Salesforce makes software designed to make it easier for companies to track their current customers' needs and identify new sales opportunities.
Buddy Media, which is based in New York, allows customers to create content on social-media sites, place ads there and measure the effectiveness of such campaigns. Combined with the Radian6 products that Salesforce acquired last month, Salesforce will be able to deliver a package that lets customers "engage, gain insight, publish, advertise and measure social marketing programs," Michael Lazerow, CEO and co-founder of Buddy Media, said in a blog post Monday.
Like Salesforce's other offerings, the social-media products will be delivered over the Internet, an approach known as cloud computing. Salesforce is one of the early proponents of providing business software applications over the Internet, a contrast to the traditional method of licensing and installing software on individual computers kept in companies' own offices.
The rise of cloud computing has been a boon for Salesforce, which started in San Francisco in 1999 at the height of dot-com boom. The company's stock price has soared by 12-fold since its initial public offering in 2004, minting Salesforce with a market value of $18 billion. Stock market analysts predict Salesforce's annual revenue will hit $3 billion during the current fiscal year.
Salesforce's success has spurred long-established business software makers Oracle Corp. and SAP to launch aggressive expansions into cloud computing, primarily by spending billions of dollars buying other companies.
The Buddy Media deal represents the biggest acquisition in Salesforce's history.
Founded in 2007, Buddy Media has almost 1,000 customers, including Ford Inc., Hewlett-Packard Co. and Mattel Inc. Salesforce has more than 100,000 customers.
Salesforce, which is based in San Francisco, said that it will pay approximately $467 million in cash, $184 million in regular Salesforce stock and $38 million in options and restricted stock. The buyout was approved by Buddy Media's board and is expected to close in Salesforce's fiscal third quarter, which runs from August to October.
Salesforce's stock increased 23 cents to close Monday at $131.22.
Salesforce said that the transaction should not have any material impact on its results for its fiscal second quarter, which ends in July. It should lower adjusted earnings by about 14 cents to 15 cents per share during the second half of its fiscal year, which ends in January, and boost revenue by approximately $20 million to $25 million.
The company revised its fiscal 2013 guidance to account for the acquisition. It now expects adjusted earnings of $1.45 to $1.49 per share on revenue of about $2.99 billion to $3.03 billion.
Analysts polled by FactSet expected earnings of $1.63 per share on revenue of $3 billion.