The two companies on Friday are set to announce a partnership that marries Intuit’s accounting software for small businesses with Salesforce.com’s sales-automation offerings–-all handled over the Web, or in the cloud, as many industry executives put it these days.

They plan to offer a Web-based application based on Salesforce.com technology that will be sold through Intuit’s App Center for users of QuickBooks, a program used to manage the finances of 4.5 million small businesses, Intuit said.

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The effort was launched in late 2009 as an initiative of the San Mateo Area Chamber of Commerce and also is funded by companies with offices in the area, such as mutual-fund company Franklin Templeton and online software company Salesforce.com Inc. The goal of the Edge, which is structured as a nonprofit, is to help the mid-Peninsula region from South San Francisco to Redwood City to be more business-friendly and to attract new companies into the neighborhood.

So far, the San Mateo City Council has approved $75,000 in funding for the Edge and has agreed to put in an additional $50,000, contingent on whether the group raises a matching $50,000 from corporate sponsors. The Edge has held a forum for businesses and entrepreneurs to discuss local issues and is now working on projects such as getting downtown San Mateo wired with better high-speed broadband, among other things.

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Outside the Moscone Center in San Francisco, people with blue suits and blue umbrellas rode around on Segways carrying an advertisement from Microsoft, which markets what the industry calls cloud-based software in competition with Salesforce’s. The ad showed a gray-haired man–symbolizing a corporate technology buyer, presumably–said to have favored a Microsoft offering because it works the way he does.

“I didn’t get forced,” the ad’s headline read, in a play on Salesforce’s name.

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For the quarter, CRM posted revenue of $429 million and non-GAAP profits of 32 cents a share, ahead of the Street at $410.5 million and 31 cents.

For Q4, the company sees revenue of $447 million to $449 million, with non-GAAP EPS of 27-28 cents; the Street consensus has been for $424.8 million and 28 cents.

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“We are pleased to reach this agreement with Salesforce.com to put an end to the litigation between our two companies,” Microsoft Deputy General Counsel Horacio Gutierrez said in a statement. “Microsoft’s patent portfolio is the strongest in the software industry and is the result of decades of software innovation. Today’s agreement is an example of how companies can compete vigorously in the marketplace while respecting each other’s intellectual property rights.”

Microsoft first sued Salesforce.com in May, alleging the company’s CRM services violated nine Microsoft patents. Salesforce.com promptly branded the company a patent troll and “a former leader of industry.” But a month later, it slapped Microsoft with a patent suit of its own and hired David Boies, the former U.S. Justice Department attorney who successfully argued the federal antitrust case against Microsoft, to represent it.

“I guess you know you’ve made it in software when Microsoft is protesting your event. Or maybe when they’ve sued you. This is the greatest thing that’s ever happened in my career.”

– Salesforce.com CEO Marc Benioff

Salesforce.com CEO Marc Benioff says Microsoft is a patent troll. Looks like it takes one to know one. On Thursday, the company answered Microsoft’s charges of patent infringement with patent-infringement charges of its own.

In a suit filed in U.S. District Court in Delaware, Salesforce accuses Microsoft of willfully violating five of its patents and using them in everything from Windows 7 to the Windows Live authentication system. And the company is really going for the neck here: Not only is it seeking triple monetary damages, it has hired David Boies, the former U.S. Justice Department attorney who successfully argued the agency’s antitrust case against Microsoft, to represent it.

But if Microsoft (MSFT) finds this disconcerting, the company isn’t letting on. Reached for comment, Horacio Gutierrez, vice president and deputy general counsel, said it’s still intent on taking Salesforce (CRM) to the mat over this. “We are reviewing Salesforce.com’s filing, which we have just received,” he said. “We remain confident about our position and will continue to press ahead with the complaint we initiated in the U.S. District Court for the Western District of Washington.”

Here Mr. Benioff outlines his decision behind the shift:

Announcing UCSF Benioff Children’s Hospital

In business, we say that people overestimate what you can do in a year and underestimate what you can do in a decade. This is true in philanthropy as well.

It’s this idea–one that we’ve seen proven at salesforce.com–that has inspired Lynne and me to transform how we approach our personal philanthropic giving. For the last two decades, we’ve been privileged to be involved in philanthropy, both personally and through the Salesforce.com Foundation. We’ve enjoyed the rewards of giving to a wide variety of causes around the world.

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“Patent trolls are part of the industry today; that’s just the way it is,” he said. “We’ve dealt with them before and we’ll deal with this situation in the same exact way. I’m just very disappointed in this, from a former leader of our industry, that they would do this.”

Benioff’s remarks today echo those he made during a May 20 earnings call, though this time he exercised a bit of restraint and stopped short of decrying Microsoft (MSFT) as a bunch of “alley thugs.”

His message, I suppose, is that Salesforce.com (CRM) isn’t much worried by Microsoft’s suit–though perhaps it should be, given the limited patent portfolio in its defense arsenal and Microsoft’s endgame here. As analyst Rob Enderle wrote last week:

Microsoft wants to set an example and losing isn’t an option. In addition the patents in question are key to being able to defend Microsoft’s existing market making the combination into one of the most important legal efforts that Microsoft is likely to undertake. This means they probably won’t settle, will fund the effort fully, and will do whatever it takes to make it successful. ?

“We continue to analyze the potential merits of their claims, the potential defenses to such claims and potential counter claims, and the possibility of a license agreement as an alternative to litigation,” the company said. “However, there can be no assurance that this claim will not lead to litigation in the future.”

Well, looks like the claim has indeed lead to litigation, and litigation from a formidable opponent, too: Microsoft (MSFT).

On Thursday, the software behemoth filed suit against Salesforce, accusing the company of infringing nine patents describing things like “Method and system for stacking toolbars in a computer display” and “System and method for controlling access to data entities in a computer network.”

The complaint, filed in U.S. District Court in Seattle, seeks an injunction against Salesforce and unspecified monetary damages.

“Microsoft has been a leader and innovator in the software industry for decades and continues to invest billions of dollars each year in bringing great software products and services to market,” Horacio Gutierrez, Microsoft’s deputy general counsel of Intellectual Property and Licensing, said in a statement. “We have a responsibility to our customers, partners, and shareholders to safeguard that investment, and therefore cannot stand idly by when others infringe our IP rights.”

An interesting move for Microsoft, which doesn’t typically initiate patent litigation. Though it has been sued many times for patent infringement over the years, the company has only filed a handful of IP suits itself.

That said, Microsoft and Salesforce have been competing more aggressively in the cloud-based CRM space recently.

Salesforce.com declined comment on the suit.

The move comes as companies throughout the industry gear up for a period of consolidation. Salesforce.com, which has made relatively few deals in its history, recently hired several mergers and acquisition specialists and in January raised $575 million in debt.

(The debt–and the notion that Salesforce was gearing up to make acquisitions–was the subject of a story in Tuesday’s Wall Street Journal.)

Salesforce has had its eye on Jigsaw for several years, but only got serious about a possible deal a few months ago, says Kendall Collins, Salesforce’s chief marketing officer.

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Software companies including SAP AG (SAP), Adobe Systems Inc. (ADBE) and Salesforce.com Inc. (CRM) have recently raised several billion dollars by selling debt for the first time in their histories. The moves follow similar offerings over the past year from cash-rich giants like Microsoft Corp. (MSFT), which had $25 billion in cash when it took on debt for the first time last May.

The decision to take on debt breaks from tradition in tech, where companies have typically preferred to raise money by selling stock. Debt has become a more attractive fundraising option largely because interest rates are low.

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For FY Q4, the company sees revenue of $340 million to $342 million and EPS of 14-15 cents; the Street has been expecting $334.6 million and 15 cents.

For all of 2010, CRM now sees revenue of $1.292 billion to $1.294 billion, and EPS of 62-63 cents; the Street has been expecting 62 cents.

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“The interesting thing about cloud computing is that we’ve redefined cloud computing to include everything that we already do,” Ellison said. “I can’t think of anything that isn’t cloud computing with all of these announcements….These people who are writing this crap are out there. They are insane. I mean it is the stupidest. Is it ‘Oh, I am going to access data on a server on the Internet.’ That is cloud computing?…Maybe I’m an idiot, but I have no idea what anyone is talking about. What is it? It’s complete gibberish. It’s insane. When is this idiocy going to stop?”

In conversation with former Sun (JAVA) CEO Ed Zander at a Churchill Club event a little over a year later, Ellison expanded on those remarks, suggesting that if the cloud is anything, it’s a cloud of BS.

Cloud’s water vapor….Cloud computing is not only the future of computing, it is the present and the entire past of computing.

…Salesforce.com has been around for a decade. And so has NetSuite…and people are saying, “Well, that’s cloud computing.” Google is cloud computing. Everyone is cloud computing….Everything is in the cloud now….It’s this nonsense.

…But it’s not water vapor. All it is is a computer attached to a network. What are you talking about? I mean, what do you think Google runs on?…Water vapor? It’s databases and operating systems and memory and microprocessors and the Internet!

…And the VCs, I love the VCs. [They ask their start-ups] “Oh…is that cloud?” [And the start-ups go] “Oh! Oh! Microsoft Word! Change ‘Internet’ to ‘cloud’! Mass change. Give it back to these nitwits on Sand Hill Road.”

…What do you mean by “cloud computing”?…All the cloud is is computers on a network.

Our industry is so bizarre. They just change a term and they think they’ve invented technology….You can’t just come up with a [slogan] like “Let’s call that ‘cloud.” [But] it sure beats innovation.”

Below, the full video. Ellison’s rant begins around the 45:54 mark.

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Sacconaghi believes that Dell (DELL) isn’t interested in a “transformational” acquisition, though its interest in the handset market might suggest otherwise. Rather, the company is mulling the acquisition of small- to medium-sized enterprise-related companies.

“While there has been speculation that Dell could look to acquire a handset company and we continue to believe that a consolidation play in the PC space could make sense for additional details, Dell appears focused on boosting its enterprise business by acquiring small to medium sized companies with strong margin profiles and higher levels of recurring revenues,” Sacconaghi writes.

Which companies? Software, services or storage and networking outfits, most likely, says Sacconaghi. Companies like Perot Systems (PER), Salesforce.com (CRM), Compellant (CML) and 3Com (COMS).

“We see Dell potentially looking to acquire a smaller remote infrastructure management company, or a smaller outsourcer–Perot fits the latter description, and is possible, but it is unclear that it is a willing seller, and its unique concentration (50 percent) in healthcare may be too narrow a platform for Dell’s offerings,” the analyst writes.

“…Dell’s software acquisitions to date have largely centered around systems management and we believe that similar types of companies could be acquired to further expand Dell’s capabilities. Also in software, we believe that [Salesforce.com] would be strategically consistent with Dell’s efforts to drive business at mid to large enterprises, but would be expensive ($4.8B current market cap) and would have a limited impact on revenues ($1.1B in their last FY)….

“Given that Dell’s biggest enterprise partnership is in storage, we believe the company could look to acquire additional IP for its own use. Compellent and CommVault (CVLT) could be appropriate targets. We think a networking deal is less likely, but purchasing someone such as 3COM and attempting to commoditize the networking space would not be inconsistent with Dell’s stated enterprise strategy.”

An interesting list of targets. Still, you’ve got to wonder why it doesn’t include Palm (PALM). After all, Dell really can’t afford to miss out on the handheld market completely. Can it?

Salesforce.com (CRM) on Thursday reported a 23 percent increase in revenue from the year-ago period. But the company lowered its full year revenue outlook from between $1.3 billion and $1.33 billion to between $1.25 billion and $1.27 billion.

Marc Benioff, CEO of the online-software maker, didn’t sound like a man who believes the worst is over. He said during a conference call that new customers are taking longer to make decisions and that existing ones aren’t expanding the way they historically have. And he balked when asked if the company’s month-by-month performance indicated any trends: “I feel most comfortable really just delivering these aggregate results right now,” he said.

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However…

Looking ahead, Salesforce (CRM) said its current quarter would miss analysts’ estimates, and it reduced its full-year revenue outlook, saying sales will fall between $1.25 billion and $1.27 billion. The Street, which had been looking for $1.3 billion, was not at all happy with that and promptly sent the company’s shares down 7.6 percent.

The Open Cloud Standards Incubator is part of an organization called Distributed Management Task Force.

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Nemeroff this morning cut his rating on CRM to Sell from Hold, noting that the shares at last night’s close of $37.38 were more than $10 above his $27 target price. His view is that the company’s small and medium-sized customers “could continue to be pressured by negative economic headwinds and that subscriber attrition at existing larger customers could continue to increase over the next 1-3 years due to shelf-ware reductions from multi-year agreements coming up for renewal.”

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Research firm Wedge Partners today took a look at the potential targets and came up with plenty of candidates. They think the company is going to enter a more active acquisition period, with most of the focus on smaller venture-backed companies, but adds that they could do “a handful of acquisitions” in the $100 million to $500 million range. And maybe a bigger deal or two. In particular, they see Oracle targeting deals in Software as a Service, virtualization and health-care technology.

Here’s Wedge’s list of potential targets in each of the three sectors:
Software as a Service:

Salesforce.com (CRM): Wedge notes that Ellison was an early investor and still holds his position; CEO Marc Benioff is a former Oracle exec. Wedge contends that “despite the bluster from both companies,” they rarely compete. They assert that Oracle’s SaaS offering is “greatly inferior” to CRM’s.

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Software is dead.”

– Salesforce.com CEO Marc Benioff, June 2000

Salesforce.com has seen a fair bit of its value evaporate amid the economy’s downward spiral. But the same cannot be said of its business, which is apparently doing quite well. Posting fourth-quarter earnings today, Salesforce.com (CRM) reported record revenue of nearly $290 million with annual sales exceeding $1 billion. Pretty damn good for a cloud computing company weathering a recession. Far better than the Street had expected. Consensus estimates had Salesforce.com earning seven cents a share. Instead, it earned 11 cents a share. “Salesforce.com is proud to be the first billion dollar cloud computing company,” said salesforce.com CEO Marc Benioff. “At a time when capital is precious, big-ticket software purchases just don’t make sense.”

Seems Benioff’s infamous “software is dead” pronouncement is slowly coming to pass.