's quarterly results disappoint Wall Street

Reuters Inc's quarterly earnings and outlook disappointed investors as costs rise following a spree of acquisitions, sending its shares lower.

Under Marc Benioff, Salesforce's CEO and founder, the company's fast revenue growth has made it a favorite with investors eager to own part of the growing trend among businesses to outsource their information technology needs - from servers to software, a phenomenon known as cloud computing.

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But Salesforce has struggled to earn consistent profits. Its stock has underperformed the S&P 500 year to date but it still trades at 85 times expected earnings, compared to an average of 17 for its peers.

During the quarter ending in April, Salesforce's subscription and support costs rose faster than its revenue, pushing its bottom line further into the red.

Moving beyond "organic" expansion of the company, made a series of major acquisitions last year that included a $745 million deal for Buddy Media, a social media marketing software company.

"They're moving from organic to inorganic growth. And inorganic is very expensive," said Bernstein analyst Mark Moerdler. "They're building out lots of sales organizations in lots of different areas."

Inorganic growth refers to expanding through acquisitions, in contrast to growth of existing business.

Considered the leader in cloud computing, Salesforce is facing rising competition from Oracle Corp , SAP AG and Microsoft Corp , which are intensely pursuing its customers and making splashy acquisitions to match Salesforce's product offerings. had a first-quarter net loss of $67.7 million or 12 cents a share, compared to a net loss of $19.5 million, or 4 cents a share, in the same quarter last year.

Salesforce said on Thursday its non-GAAP diluted earnings per share in the first quarter were 10 cents, in line with expectations.

It said it expects adjusted earnings in the current quarter of 11 or 12 cents, also in line with expectations.

"The guidance is just in line and we're used to seeing these guys raise," said Pacific Crest Securities analyst Brendan Barnicle. "We see this as a buying opportunity." also said full-year EPS would be between 47 cents and 49 cents, compared to expectations of 49 cents.

The seller of on-demand business software posted fiscal first-quarter revenue of $893 million, up 28 percent from the previous year.

It said revenue in the current quarter would be in the range of $931 million to $936 million.

Analysts on average expected first-quarter revenue of $887 million and current-quarter revenue of $934 million, according to Thomson Reuters I/B/E/S.

Shares of fell 6.43 percent to $42.75 in extended trade after closing down 0.20 percent at $45.69.

(Reporting by Noel Randewich; Editing by Phil Berlowitz)