Yahoo Finance Live anchors discuss the issues Salesforce is facing.
- It's been a rough few weeks at Salesforce after the departure of three top-level executives at the company. And Wall Street's not taking the news well. Shares saw their worst day since 2020 this week, and they're taking a hit this morning after a downgrade from investment firm Baird. To the drama-- the drama, I should say, caught the attention of Mr. Sozzi, and that's where we find his take today. You follow this company pretty closely.
BRIAN SOZZI: Yeah. It's-- first of all, I have to give a hat tip to Emily Glazer over "The Wall Street Journal." They reported some tensions internally over at Salesforce between now outgoing co-CEO Bret Taylor and founder Marc Benioff. Just my interactions with both of them, they're two very distinctly different people. I think Bret has been very, I think, focused on operational execution and getting-- talking to CEOs a lot outside of the company.
Marc Benioff is Marc Benioff. He's a big presence. But I think he wanted to maybe pull back a little bit here and start focusing on other efforts and his other various endeavors.
But again, here are a couple problems here I think that is ultimately hurting Salesforce and at some point they're going to have to address. You have that C-suite exodus. Not only is Taylor leaving, you also have Slack founder Stewart Butterfield. He recently said he was leaving about a week and a half ago. You had Tableau's CEO leave as well.
So-- there's also been a couple other people leave at Slack in addition too. This comes at a time where the company is really trying to focus on improving its operating margins. And oh, yeah, that's also happening while sales growth is slowing. And again, you have this leadership uncertainty not just within the CEOs of each or some of these brands, but also that next level or third level down inside of Salesforce.
And to that end, we just recently caught up with Brent Thill. He's been covering Salesforce for a long while. Take a listen to his comments on what he thinks is bugging or really weighing on Salesforce shares here.
BRENT THILL: Again, I have huge admiration for Mark, but I think investors right now have lost confidence in his ability to get control of the expenses and actually drive this through this recession. And so, you know, again, that's investor sentiment.
BRIAN SOZZI: You know, I was thinking back over to Dreamforce. That, of course, is the big Salesforce annual conference. And I asked Marc about the focus on operating profits and operating margins. It is-- they have been lagging a lot of peers in the industry, and it reflects a lot of the acquisitions the company has made over the past five years-- Slack, Tableau, you name it, MuleSoft. And Marc said, I don't think the market appreciates how much we're focused on operating margins.
And to that point, here's my take. Marc's going to have to prove that this company can get its operating margins up next year, and they can do so in a big way. They have the brands. They have the scale. They have the market share. And there I am with Marc Benioff in those clouds, you know, wanting to see them do well. I mean, this is a good company doing a lot of good, interesting things on the tech front, and they do have a good opportunity to bring those margins up.
- I think what Salesforce did well very early on was making CRM and SAS sexy. It was a user interface that people would rather spend mass amount of times in if you had to, if you put that up against Oracle or SAP. But that was now 10 years ago. And so now for the disruption that they've been able to do, the acquisitions that they've been able to strategically move forward with, and now that next leg of growth that they're trying to initiate, what is the next reinvention for that user experience that's going to really upcycle that next wave of customers that are going to hop into the ecosystem?
BRIAN SOZZI: Well, on the positive side, I think they have successfully integrated Slack with Tableau, and MuleSoft, and Salesforce. All these products are now being sold in one uniform way. That's good. And there is a lot of innovation coming on Slack, and MuleSoft, and Tableau. But again, they're going have to drive a lot more of it and perhaps hold off on making that next big acquisition, even though valuations for a lot of companies that they are eyeing have come down considerably and really, I think, next year about execution, improving margins in all of those businesses.
- All right.
- All right.