Salesforce to cut workforce by around 10%

Takako Hatayama-Phillips

• Salesforce (NYSE:CRM) said Wednesday it is embarking on restructuring that includes laying off about 10% of its workforce.
• CRM rose 1.8% in premarket trading.
• "As our revenue accelerated through the pandemic, we hired too many people leading into this economic downturn we’re now facing, and I take responsibility for that," co-CEO Marc Benioff wrote in a letter to employees.
• CRM will also exit real estate and reduce office space in some markets.
• "The Company estimates that it will incur approximately $1.4 billion to $2.1 billion in charges in connection with the Plan, of which approximately $800 million to $1.0 billion is expected to be incurred in the fourth quarter of fiscal 2023," Salesforce (CRM) said.
• Affected employees will receive an email within an hour of the announcement, Benioff said.
• Read the full filing.

Comments

[baja_govindam]

I think cutting c-suite salary by 50% is au h better option than axing people.

[TommyIrish]

@baja_govindam

Axing foot-soldiers, 10% at first, is easy.

For Wokeioff to cut HIS comp?

That would hurt - milking it every step of the way.

Sad to watch, but Mad Money notwithstanding, hopeless.

Next stop $50.

[TommyIrish]

Rearranging the deck chairs on the Titanically Never Profit Making Stock Compensation Ship known as CRM.

[JDoe20]

So Benioff “takes responsibility” BUT, will his comp reflect his failure?

Something tells me . . . . . . . . . . not a chance in hell!

[Awatt127]

Called it after he questioned remote workers lol

[metalhead]

"CRM will also exit real estate and reduce office space in some markets."

The office space bloodbath is picking up the pace. 2023 looks to be CRE death.

[wboz]

@metalhead it seems both well known and also completely iceberg under water y.
Wondering what to do with names like O, WPC, DLR .. I hold small positions in a few names. Not sure I have any straight up office space names.

[metalhead]

@wboz you really have to do a lot of research (or pay someone else to do it.) Names like O, WPC may be vulnerable ... but their defenders will say that they have only "Class A" office space, or "trophy" properties that will always find tenants.

Class A will be fine, in theory, but in practice even if they find new tenants, they may have to drop the rents substantially or give similar concessions. It is an opaque industry.

There is already a lot of talk about conversions of older office buildings to residential. Not an easy lift, though. It will take time, money, and zoning hearings.

[OneMoreCup]

@metalhead so true. real estate conversion is often a myth, so many hurdles and $$$, in the end, many such projects end up breaking even.....Salesforce, honestly, 10% is too small, when it's all said and done, would not surprise me 25% total gone.....CEO is one WOKE dude for sure.....the ? I always wonder, why are they in the Dow, can someone explain the reasoning there?

[Gaditana]

I don’t see why this can’t trade down to 14x earnings like META. Do they even account for stock issuance expense to give a GAAP earnings number?

[Fractal Finances]

@Gaditana META suffers from long-term directional strategy issues (metaverse) as well as significant PR issues. CRM luckily side-steps these two issues. CRM's SBC is embedded within COGS, G&A, and R&D. They would be wholly uncompliant with GAAP if they didn't include SBC in their reported financials.

[User 6680841]

From the full filing, it seems this is mostly targeted end of 2023 and 2024. Given that they probably lose some percent of employees each year anyway to quitting / retiring, this is announcing barely significant layoffs over the next two years.

From the full filing:

"approximately $800 million to $1.0 billion is expected to be incurred in the fourth quarter of fiscal 2023. These charges consist primarily of $1.0 billion to $1.4 billion in charges related to employee transition, severance payments, employee benefits, and share-based compensation;"

"The actions associated with the employee restructuring under the Plan are expected to be substantially complete by the end of the Company’s fiscal 2024"

[MadisonAv]

@User 6680841 Their fiscal 2023 year ends in January 2023.

[sparkn]

I believe their fiscal 2023 ends January 2023 (current month)…

[BWAHAHAHAHAHA]

"Wokeforce" facing reality?

[TommyIrish]

@BWAHAHAHAHAHA

The ESG crowd were wrong.

Woke not necessarily a great investment.

Hype based investment CAN fail…

[Edward J. Roche]

Another Cramer favorite that was massively over priced for many years takes a big fall...

[tboucher1]

Another bursting bubble stock.

[Roiss' Conclusions]

After the bounce, I think it is time to get back into the $CRM short. SBC is still 6x the operating income and 10% of revenue. At 53x EV/EBITDA, the stock is still priced to perfection.

[Clark158f1]

How would you like to receive an email telling you had lost your job ? Pretty tacky.

[Gaditana]

@Clark158f1 Benioff has to be one of the most unlikeable people in business today. The hypocrisy of broadcasting his philanthropy while treating his employees like this is just appalling.

[honestjohn1]

@Clark158f1 , well, I initially thought something similar, but many people work remotely and don't like going to the office. Welcome to the younger gen new normal.

[Reavette]

@Clark158f1 No, not fun. The first time I had a customer fire us with a fax was a bit jarring. Now we get fired by email. In the end it's the same result. Go find another source of income.

[SuperPac]

They woke up very late on this. The writing was on the wall 6 months ago. The days of SaaS over-valuation was going in the rear view mirror. They must heavily bring down their SBC.

[kingweewee]

@SuperPac hello new here, was there sbc $1.2 billion? If not can you point me on where I can find their sbc. I would appreciate it