Shulou(Shulou.com)11/24 Report--

On the morning of December 6, Beijing time, the turmoil at the top of Salesforce is causing concern on Wall Street.

On Monday, Salesforce announced the departure of Stewart Butterfield, chief executive of Slack. Barfield joined Salesforce in Salesforce's acquisition of Slack last year. It is also the largest acquisition in Salesforce's history. On Wednesday, Bret Taylor, co-chief executive of Salesforce, who orchestrated the Slack deal, also said he would leave the company. It is only a year before he was promoted to co-chief executive.

Three trading days after Taylor announced his departure, Salesforce reported third-quarter results, followed by two of the worst-performing trading days this year, with shares falling 8.3 per cent and 7.4 per cent, respectively. This year, Salesforce's market capitalization has shrunk by 47%, while the Nasdaq index has fallen 28% over the same period. Salesforce shares have fallen to their lowest level since the early days of the outbreak in March 2020.

Taylor joined Salesforce in 2016, when Salesforce acquired his startup, Quip. This time, he said he would return to starting a business. "We have to set him free," Marc Benioff, co-chief executive of Salesforce, said on the earnings call. "I understand, but it's not what I like."

Barfield's reasons for leaving are not the same. "I'm not going to start a business again," he said in a Slack message. "corny as it sounds, I will spend more time with my family (as well as working on personal projects, focusing on health, and spending time on things that are difficult to do as the head of a large organization)."

There are many more executives Salesforce is leaving. Last month, the company said that Gavin Patterson, president and head of strategy, would leave in January. On Thursday, Mark Nelson, president and chief executive of Salesforce's Tableau, said at Twitter that this was his last day at the company.

Along with Mr Barfield, other Slack executives will leave, including Tamar Yehoshua, head of product, and Jonathan Prince, senior vice president for brands, marketing and public relations, sources said. Mr Barfield said in a Slack message that Noah Weiss, Slack's senior vice president of products, would replace Mr Yehshua. Barfield's own successor is Lidiane Jones, an executive vice president who joined Salesforce in 2019.

Salesforce acquired Slack during the outbreak. Because employees were forced to work from home at that time, the application of Slack was very popular. In a series of Twitter posts on March 25, 2020, Mr Barfield said the company was experiencing "early signs of a proliferation of new teams and new paying users that we have never seen before". He also said that with regard to the transformation of internal communication from email to chat apps, "we think this is inevitable in the next five to seven years", and the epidemic has only accelerated for 18 months.

Salesforce was so interested in Slack's development that it bought the company for $27 billion, giving the company a forward price-to-earnings ratio of 24 times. This is also one of the highest P / E ratios in the history of the software industry. Although Taylor was not chief executive at the time, his name was everywhere on the deal. Taylor contacted Barfield several times about a possible acquisition in August and September 2020, according to a filing with the Securities and Exchange Commission (SEC). The two sides continued to negotiate and finally announced the acquisition agreement on December 1 of that year.

Salesforce's acquisition of Slack was completed in July 2021, and its shares hit an all-time high of nearly $310 four months later. Salesforce shares have fallen 57% since then, closing at $133.93 on Monday.

Like other high-valued technology companies, Salesforce has been hit by soaring inflation and higher interest rates this year. These factors have prompted investors to choose safer areas of investment in times of economic downturn. At the same time, Salesforce's performance is also poor. Last week, the company reported a 14% year-on-year increase in third-quarter revenue, the slowest pace since the company's IPO in 2004. Meanwhile, Salesforce expects fourth-quarter revenue to grow by only 8 to 10 per cent year-on-year.

Salesforce also broke with the tradition of third-quarter results and failed to release its outlook for the next fiscal year.

Analysts at brokerage Guggenheim said in a research note that "there are two elephants in the room". The first problem is the failure to provide a performance outlook for next year. "the second elephant is why Taylor decided to give up the high-profile position of co-chief executive and vice-chairman after just a year in office." They rated Salesforce as "hold" and reminded investors that Keith Keith Block resigned as co-chief executive three years ago, 18 months after taking office. "since then, the company seems to have been in trouble".

After the news of Taylor's departure was announced last week, analysts at brokerage Wedbush also wrote: "Wall Street sees Taylor as one of the mainstays of Salesforce CRM strategy, so this is shocking."

A spokesman for Salesforce declined to comment, reiterating an earlier statement by the company about Mr Barfield's departure.

On Thursday, Wolfe Research, a research firm, downgraded Salesforce's stock from "buy" to "hold" and said the company was opening a "difficult new chapter" after execution errors, the departure of important figures and slowing revenue growth.

The only bigger blow to Salesforce's share price in 2022 was at the beginning of the year. On January 5, UBS downgraded the shares of Salesforce and Adobe, saying that corporate technology spending had been driven by the epidemic and that the two companies would suffer a sustained slowdown in the future.

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