Salesforce

Salesforce confirms it has laid off hundreds of employees • ZebethMedia

By zebethcontrolPosted on November 8, 2022Posted in cost cutting, Enterprise, Layoffs, Marc Benioff, SalesforceNo Comments

Salesforce laid off hundreds of people this week as the onslaught of tech cutbacks continued unabated. The company would not share an exact number, but said it was less than a thousand, and the people involved were informed yesterday, according to a person close to the company. Protocol first reported the layoffs (although it got the number and timing wrong). While it was not on the scale of Twitter’s massive layoffs last week, it still was yet another announcement in the continuing drum beat of tech layoffs we have been hearing about from companies large and small over the last several months, as companies aim for profitability after a long period of growth uber alles. The news comes on the heels of activist investor Starboard Value taking an undetermined stake in the company last month. In our analysis of the Starboard news, we said that it appears to be looking for cost cutting, and this move would appear to be in line with that thinking. As we wrote at the time: Regardless, Starboard claims that Salesforce’s growth and profitability (“CY2022E revenue growth + adjusted operating margin” in accountant-speak), is 13% or 14% under what it should be. How might Salesforce fix that gap? By improving its operating margin, Starboard reckons. How does it do that? By cutting costs. But it’s worth noting that Salesforce itself recognized that it needed to cut back on spending, even prior to Starboard’s involvement. Salesforce CFO Amy Weaver, stated in an Investor Day presentation last month that even as the company was shooting for $50 billion in revenue by FY 2026, it was also looking to get more profitable by aiming for a 25% operating margin in the same time period. The path to that goal is of course via cost cutting. Salesforce’s official statement on the layoffs: “Our sales performance process drives accountability. Unfortunately, that can lead to some leaving the business, and we support them through their transition.” You can take from that what you will, but it sounds like if they aren’t making the revenue they want to, then they have to cut back and that’s what they did this week. Salesforce had over 73,000 employees prior to this action, so the layoff represented a fraction of the overall workforce, but that’s likely little comfort to the folks who lost their jobs this week.

With Bret Taylor out as Twitter board chair, he can focus entirely on Salesforce • ZebethMedia

By zebethcontrolPosted on November 1, 2022Posted in Bret Taylor, elon buys twitter, Elon Musk, Enterprise, Salesforce, TwitterNo Comments

Usually being a board chair is a job that involves running some meetings and pushing through routine company business, but when Bret Taylor became Twitter board chair last year, he was getting a lot more than he bargained for. Taylor was promoted to the job in November 2021, the same day Jack Dorsey resigned as CEO. That in itself was an inauspicious start, and it would only get rockier. As though that weren’t enough for one person to take on, Bret was also promoted to co-CEO at Salesforce in the same week. It seemed like a good thing at the time, helping run two of the most influential tech companies out there, but the situation with Twitter quickly devolved. By April, Elon Musk bought a 9.2% stake and demanded a board seat before backing off that and making a $43 billion offer to buy the company outright. It’s been a roller-coaster ride ever since, with the board accepting the offer, then Musk trying to back out, the board initiating a court case to force him to go through with it, and finally Musk taking over this week and promptly dissolving the board under the terms of the merger agreement. That’s quite a ride by any measure, and after all that, who would blame Taylor for being anything but relieved that the gig was over. Truth be told, the board chair gig probably took up a bit more of his attention than he had anticipated when he agreed to take the job. But now Taylor can devote himself, fully unencumbered, to his day job being co-CEO at Salesforce, leading the CRM giant with co-founder, chairman and co-CEO Marc Benioff. Meanwhile, Salesforce has been having some issues of its own, with its stock price down 34% this year. To be fair, many SaaS stocks are down double digits this year, but it has left it vulnerable to activist investors. And earlier this month, Starboard Value took an undetermined stake in the company with plans to work with Salesforce to increase its value. That’s enough of a headache to deal with without another job gnawing at your consciousness, especially one that involved the mercurial Musk. The company also announced big plans to reach $50 billion in revenue by FY2026, which pleases investors, even Starboard, but they want to see the company increase growth and profitability. In its most recent earnings report at the end of August, the company reported revenue over $7.7 billion, putting it on a run rate over $30 billion, but that’s a fair distance from the stated goal of $50 billion in about two and a half years. It wasn’t that long ago that $20 billion was the goal, so I wouldn’t put it past them, but it’s going to take focus to get there, and being involved in the Twitter saga could have been an unnecessary irritant pulling Taylor away from this central task. The bottom line is Taylor has a lot going on. He is co-leading a company with over 70,000 employees with activist investors breathing down the company’s neck. Getting let go by Elon Musk frees him to devote his full attention to Salesforce. And that might not be a bad thing.

A brief history of activist investors in tech and the role they play • ZebethMedia

By zebethcontrolPosted on October 21, 2022Posted in activist investors, EC Cloud and Enterprise Infrastructure, Enterprise, investing, Salesforce, Starboard ValueNo Comments

On Tuesday, activist investor Starboard Value revealed a significant stake in Salesforce, sending the company’s stock climbing more than 7%. A hedge fund founded in 2002 by Jeffrey Smith and Mark Mitchell, Starboard has a history of affecting change at major companies, spurring the spinning off of media startup Patch from AOL in 2014 and the replacement of the entire board of directors at Darden Restaurants, the company that owns Olive Garden and Longhorn Steakhouse. Activist investors — typically specialized hedge funds that buy significant minority stakes in publicly traded companies with the goal of changing how they’re run — have become more active within the tech sector in recent years. According to an analysis by Bloomberg Law, investor activists launched more campaigns in tech during Q2 2022 than in any other sector. But how many of these activists have been successful in achieving their aims? It depends on how you define success. A Harvard, Columbia and Duke University study published in 2013 looked at 2,000 interventions by hedge fund activists from 1994 to 2007. It found that, in the short run, stocks tend to rise around 6% when activist investors get involved. And the upswings aren’t temporary. In the five years after activist investors show up on the scene, the stock prices of companies targeted by them tended to hold onto the initial gains — even when the activists employed hostile tactics. Consider the split-up of Motorola’s business in 2008, a move advocated by activist investor Carl Icahn. In 2011, owners of Motorola held stock worth over 20% more than it was before the split — much of it as a result of Google’s deal to buy Motorola’s mobile-focused spinout Motorola Mobility. As Icahn predicted, divvying up the company made the individual pieces more enticing. That’s not always the case, however — as the past decade or so shows.

Starboard Value reportedly taking ‘significant’ stake in Salesforce • ZebethMedia

By zebethcontrolPosted on October 18, 2022Posted in activist investors, CRM, Enterprise, Salesforce, Starboard ValueNo Comments

Activist investor Starboard Value announced this morning that it was taking a “significant stake” in Salesforce, per CNBC. A presentation on Starboard’s website confirmed the firm’s interest in Salesforce, as well as Wix and Splunk. The presentation looks at the company’s financial situation and concludes that it could be giving investors a better return. On the positive side, Starboard likes the company’s refreshed executive team with Bret Taylor as co-CEO. It also likes Salesforce’s ambitious $50 billion revenue target for fiscal year 2026, but Starboard was less pleased with Salesforce’s combined growth and operating margin target of 42%. It claimed that Salesforce’s peers’ average is over 50%, and the implication is that it wants to see Salesforce closer to — or ahead of — its peer group. Further, Starboard sees a company that has much greater scale than peer cloud companies like Workday and ServiceNow, its comparison companies. Starboard claims in the investor presentation that “despite expecting to grow slower than [these] peers, [it] is only targeting operating margins in-line to below its much smaller peers.” “On a growth + margin basis, Salesforce significantly lags these companies and the peer set,” the company wrote in its presentation. It believes that if Salesforce “generates incremental margins that are in-line with peer levels as it grows towards $50 billion in FY2026 revenue, margins would significantly exceed the Investor Day target.” And that would increase free cash flow per share over the next several years as it approaches that $50 billion revenue mark. Salesforce issued a rather staid reaction to the news of Starboard’s move: “We are committed to acting in the best interests of our shareholders and are focused on continuing to execute on our strategy outlined at Dreamforce,” a company spokesperson told me. Salesforce stock is up over 6% in trading this morning on the news. This is a breaking story. We will update the story with additional information as it becomes available.