A hot high-tech concept known as cloud computing is lifting Salesforce.com Inc.’s stock to lofty heights.
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The shares rocketed more than 18 percent Friday after Salesforce issued a strong third-quarter earnings report and an optimistic management forecast that persuaded several analysts that the stock is bound to climb even higher. As it is, Salesforce in nearly 6 1/2 year as a public company is proving to be more fruitful than high-tech darling Google Inc.
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The fervor surrounding Salesforce has been swelling during the past year because the company appears to be sitting in a sweet spot as more businesses and government agencies change the way they buy and use software.
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After years of paying huge upfront fees to install and maintain applications on individual computers in their offices, more companies are embracing the idea of subscribing to software that can be accessed from any machine with an Internet connection. The trend is becoming so popular that it has been tagged with the catchphrase cloud computing to replace its more geeky shorthand of SaaS, an abbreviation of software as a service.
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The transition has enriched and vindicated Salesforce CEO Marc Benioff, who faced widespread ridicule when he started the company 11 years ago on the presumption that the old way of installing software made by the likes of Microsoft Corp., Oracle Corp. and SAP was doomed. Skeptics abounded at the time, contending that businesses would never be willing to trust a vendor to run their critical programs and applications on computers far away from their own premises.
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But now Salesforce is seen as being ahead of the curve, as Microsoft, Oracle and SAP all scramble to build their own online subscription services. At the end of its latest quarter, Salesforce boasted 87,200 customers, including personal computer manufacturer Dell Inc. and health insurer Kaiser Permanente.
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Wall Street has…