Salesforce is trying with five powerful activist investors. One way to get these companies off your back is to perform well, which drives up stock prices. Salesforce checked that box with a stellar quarterly report this week, beating street expectations by a wide margin.
That might buy the embattled company some time, and it was certainly better than a bad report. But is it enough to keep activist investors at bay?
On the same day the company was due to report its earnings, one such activist, Elliott Management, indicated it would submit its own slate of board candidates, a move aimed at gaining enough voting control to impose its agenda.
With successful quarterly revenue of $8.38 billion, Salesforce now faces scrutiny over how it could lay off 10% of its workforce amid such excellent performance (and news reports paid actor Matthew McConaughey $10 million to act as consultant). None of this is a great look for Salesforce, especially as a company that markets itself as a responsible capitalist.
The executive suite finds itself caught between critics with conflicting agendas, all while trying to run a company. It’s unlikely anyone will warm to CEO Marc Benioff and his team as they try to navigate this challenge, but it’s their reality for now.
Can this week’s promising report fend off activist investor hawks, who are targeting the company and pressuring it to cut costs further? And can Salesforce manage to maintain the growth trend, especially with minor growth guide for the next fiscal year and an uncertain economy?
One thing is clear: it probably won’t get any easier any time soon.
Under pressure
We don’t know what the activists are thinking as they seek to increase the value of their investments, but Elliott Management, which invested billions of dollars in Salesforce, issued a statement after the earnings came out indicating he was pleased, which is no small feat.
