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Posted August 17, 2010 By Paul Shread     Feedback

The cloud CRM leader continues to grow fast, challenging established players like Oracle and SAP. (NYSE: CRM) will report its quarterly results later this week, and investors will be looking for the cloud CRM leader to deliver another strong quarter.

Since going public in 2004, Salesforce's shares have soared more than 500 percent and currently trade around $100 a share. Over the same time, the S&P 500 has lost 2 percent and endured its worst bear market since the Great Depression. It's no wonder Salesforce is a darling of some of the smartest investors and hedge fund managers on the planet.

The stock is also expensive, however. It trades at 65 times next year's earnings, compared to multiples of just over 10 for top CRM rivals Oracle (NASDAQ: ORCL) and SAP (NYSE: SAP). But Salesforce is also delivering a steady growth rate of around 20 percent a year; Oracle and SAP are expected to grow at a little more than half that rate.

So far investors' optimism has been well placed. Salesforce carved out a market for itself by being early to the cloud computing revolution, and the company has continued to innovate with offerings like its Chatter collaboration service. The company even scored a big CRM deal with Facebook this quarter.

Software as a service (SaaS) sales already account for a quarter of the CRM market, according to a recent report by Gartner.

From 2007 to 2009, Salesforce increased its CRM market share from 8.3 percent to 12.5 percent, according to Gartner. Over the same time, SAP saw its market share decline from 25.5 percent to 20.2 percent, while Oracle remained steady at around 16 percent.

Microsoft (NASDAQ: MSFT) has steadily grown its CRM market share, from 4 percent in 2007 to 7.3 percent in 2009, while Amdocs (NYSE: DOX) has seen its share decline from 5.2 percent to 4.2 percent over that time, according to Gartner.

Analysts expect Salesforce to report 21.7 percent year-over-year sales growth for its July quarter when it releases its earnings after the stock market close on Thursday. Sales are expected to reach $384.7 million, according to Thomson Reuters, and earnings are forecast to grow 58 percent to 27 cents a share.

The company's outlook will also be scrutinized closely. For the October quarter, analysts expect earnings of 29 cents a share on sales of $393.8 million, or 19.1 percent revenue growth.

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