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

Beijing, January 24 (Xinhua) according to reports, Wall Street analysts said a few days ago that activist investors Elliot Investment Management (Elliott Investment Management) and Starboard Value may urge Salesforce to cut more jobs, reform the board of directors and divest some of the companies it acquired in pursuit of greater profits.

Salesforce, the largest developer of customer relationship management (CRM) software, has been grappling with slowing growth, executive departures and investor pressure. Salesforce shares have halved since peaking in late 2021.

It was reported on Sunday local time that Elliot Investment Management had invested billions of dollars in Salesforce. Investors welcomed the news, prompting Salesforce shares to rise 3.1% to $155.87 on Monday, the highest level since November 30 last year.

Earlier this month, Salesforce announced that it would cut 10% of its workforce, or about 8000. In the last three years or so, the number of Salesforce employees has increased by more than 60%, reaching about 80,000 at the end of October 2022. Some of that growth comes from a number of acquisitions, including the acquisition of Slack, a business chat app, for more than $27 billion in 2021.

Jordan Klein, an analyst at Mizuho Securities, said Elliott's stake as an activist investor had allayed concerns that Marc Benioff, co-founder of Salesforce, would make impulsive mergers and acquisitions as the only CEO to drive growth after the departure of co-CEO Bret Taylor.

Activist investors often promote strategic changes and board reforms of the companies they invest in. Patrick Walravens, an analyst at JMP Securities, an investment bank, believes that Salesforce directors are particularly vulnerable to shareholder activism because each member is running for re-election this year and four non-founders have served on the board for more than 15 years. Discussions about potential board candidates are likely to start quickly, as the nomination window opens in three weeks.

Victoria Sivrais, senior managing director of investor relations and public relations firm Clermont Partners, believes that Benioff, co-founder of Salesforce, is unshakeable, but that doesn't mean the rest of the executive team is safe.

In addition to Elliot, there are several other aggressive investors looking for Salesforce change. Last October, Starboard Value also announced a stake in Salesforce. Starboard Value believes that Salesforce has problems in turning growth into profitability and lags behind its peers.

Elliott and Starboard Value have previously tried to influence the companies they invest in at the same time. In 2019, both companies invested in eBay, culminating in the elimination of eBay CEO, the appointment of new board members and the divestiture of StubHub's ticketing division.

Derrick Wood, an analyst at Cowen & Co, an investment bank, said Salesforce was likely to experience "multiple layoffs or restructurings" as both investment companies were pushing for higher operating margins. Wood also said Elliot may have held talks with Salesforce management before the 10 per cent job cuts were announced because Elliott had done similar things to other companies before.

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