Salesforce jumps on report activist Starboard has taken stake (update)
Update 9:20am: Updates shares, adds Salesforce comment.
Salesforce (NYSE:CRM) rose 5.4% in premarket trading on a report that activist Starboard Value has taken a "significant" stake in the company.
Starboard Value head Jeff Smith will outline his thesis on Salesforce (CRM) at the 13D Monitor Active-Passive Investor conference in NYC on Tuesday, according to CNBC's David Faber. Faber didn't say the specific amount of stake or dollar amount. Salesforce has a market cap of $142 billion.
Smith will focus on driving higher incremental margins and he will say that Salesforce's (CRM) valuation discount to its peers is due to the company's "subpar" mix of growth and profitability, according to Faber. He will also argue that the company hasn't generated "meaningful operational leverage" relative to its peers in recent years. Smith also believes that Salesforce (CRM) long-term targets are "less ambitious" than peers.
"The incremental margins are nowhere near their peers," Smith said in an interview with CNBC.
Salesforce (CRM) responded in a statement emailed to Seeking Alpha.
"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," Salesforce said in the statement.
Salesforce (CRM) didn't immediately respond to Seeking Alpha request for comment.
Smith is scheduled to be on CNBC in the 10a.m. hour to talk about what he discussed at the activist conference.
Smith will also discuss Splunk (SPLK) at the activist conference, which was reported by Reuters and WSJ on Monday. Starboard has taken a stake of just under 5% in Splunk.