Cloud computing major Salesforce.com (CRM) is grabbing headlines on regular basis. The company recently introduced Spring 10. This is the company’s 31st-generation release with advanced features designed for its Sales Cloud 2 platform and Force.com site. This advanced cloud computing service is expected to introduce an entirely new user interface for Salesforce.com.

The new user interface of Spring 10 will come with updated service availability and enhanced features, making it even more user-friendly. After introducing the sales cloud in 1999, Salesforce.com made significant enhancements to its sales cloud platform until the release of the Spring 10 version.

This apart, the company’s Customer Relationship Manager (CRM) offering is the second largest contributor to the overall Software as a service (SaaS) enterprise application market. The company was the first to grab large customer accounts, which helped it build a strong market position. Follow-on business and referrals should continue to be major sources of growth for the company.

Salesforce.com reported positive third quarter results, exceeding the consensus estimate and management guidance, and provides an encouraging guidance for the fourth quarter. Salesforce has recently extended the reach of its Force.com site through value-added resellers, which is expected to generate additional revenue. Its entry into the call center market is also a positive, as the market has significant revenue potential.

For fiscal year 2010, the Zacks Consensus Estimate for Salesforce is $0.63, which is a 78.9% increase from the 2009 EPS. The Zacks Consensus Estimate for 2010 has exceeded the “most recent market consensus estimate” by just 1 cent. The company did not witness any earnings surprise in the October 2009 quarter and there were no estimate revisions in last month. Consequently, we expect in-line results and minimal impact on price when the company reports its results.

However, we are slightly cautious about strong competitors in the CRM application and cloud computing areas, as many technology behemoths like Hewlett-Packard (HPQ), Microsoft Corporation (MSFT), Dell Inc. (DELL) and IBM (IBM) are aggressively trying to grab greater marketshare of the cloud computing business, resulting in stiff competition.

Zacks Investment Research

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