Salesforce.com To Cut 200 Jobs Despite Its Expectations To Make More Money

Dawn Kawamoto writes "Sometimes, making more money is not enough. Just ask Salesforce.com. The SaaS company announced it would cut 200 jobs, during its second quarter earnings call. The cuts are coming, despite the company raising its revenue forecast for its fiscal year. Salesforce.com says it's initiating the cuts to reduce overlapping roles and to (you guessed it) gain 'synergy', following its effort to meld its cloud marketing platform company ExactTarget with its social media market suite Marketing Cloud. And apparently this isn't the first time Salesforce has tried to squeeze out those nebulous 'synergies.' It reportedly cut 100 jobs in October, when it merged its social media platform companies Radian6 and Buddy Media."

Comments

Business tries to increase profits, new at 11

[Logger]

Given they are not a charity, I don't see the issue. Maybe they have 200 people just fetching coffee that they just realized don't really contribute to the company. Layoffs are often a way to gid rid of dead weight.

Re:Business tries to increase profits, new at 11

[i kan reed]

But with the special caveat that more tax cuts on those profits will make them hire more people.

Re:Business tries to increase profits, new at 11

[Anonymous Psychopath]

Exactly.

It's sad to see that Slashdot has become such a set of Corporate worshipers. Every cut, no matter how ridiculous it may be, brings out an army of people that say BULLSHIT like the O.P. here.

In less than a week there will be a whining post about how corporations can't get good help. Well, maybe you firing them after they help you succeed is part of the problem.

Hint: a lot of you people are taking corporations as if they have been handed down by God. They aren't.

The problem isn't finding people to hire. Unemployment rates show there's plenty of warm bodies around. The problem is finding people with skill sets and costs aligned to what the business needs. This isn't some sort of emotional worship of business. That's how trade worked before we invented currency.

Re:Business tries to increase profits, new at 11

[turgid]

What usually happens is that the company does reasonably well inspite of it management, and that fact that it's making a profit is a "signal" to the geniuses at the VP level and above that they obviously have too many staff, so they make cutbacks, forcing the remaining staff to work harder and longer hours unpaid (evenings and weekends and such like) to get things done.

Meanwhile, the remaining staff get their CVs out and leave. Then things start to go wrong, deadlines are missed, quality plummets and customers get angry, demand money back, freebies and even start to sue.

Next, that part of the company gets closed down with the loss of all jobs but the "intellectual property" goes elsewhere.

Meantime, since the cost base has been further reduced, the VPs get a bonus and the share price goes up.

Why is this news?

[poet]

SalesForce is a company. Their job is to make money for their share holders. If the management decides that they have overlapping roles then it makes sense to retire those roles. I am sure they have a policy to hire within first, people can always reapply if they like working for the company.

Re:Why is this news?

[Mad Bad Rabbit]

SalesForce is a company. Their job is to make money for their share holders.

That attitude has been destroying the U.S. economy since the 1970's. The priorities of any sane company should be:

1. Provide a good or service that delights customers
2. Make enough money doing it to pay your vendors and employees fairly
3. Reinvest most of the profits in ways that will provide long-term benefit (capital upgrades, employee training, etc.)
4. If you are publicly traded, pay shareholders just enough that they don't dump your stock

If SalesForce were focused on the first three, then unless they're already at 100% market saturation, they could find profitable new tasks for those workers.
They have chosen not to, because "shareholder value" is more important to them.

Re:Why is this news?

[chihowa]

Because if I pursue the first three options, I'll be probably be around (and still profitable) after next quarter.

To turn it around, why do I want you to invest in my company if you're going to bail after one quarter or pull your investment after one poor quarter? Maximizing shareholder returns is not a successful long-term strategy for profitability.

Revenue is not the same as earnings

[ugmoe]

Revenue is not the same as earnings Full Year FY14 Guidance: Revenue for the company's full fiscal year 2014 is projected to be in the range of $4.000 billion to $4.025 billion, an increase of 31% to 32% year-over-year. GAAP net loss per share is expected to be in the range of ($0.44) to ($0.42) while diluted non-GAAP EPS is expected to be in the range of $0.32 to $0.34. The non-GAAP estimate excludes the effects of stock-based compensation expense, expected to be approximately $511 million, amortization of purchased intangibles related to acquisitions, expected to be approximately $146 million, and net non-cash interest expense related to the convertible senior notes, expected to be approximately $47 million.

Re:Revenue is not the same as earnings

[Xaedalus]

They borrowed a hell of a lot of money, are trying to keep within their debt covenants, and need to make good on the compensation packages. Growth has been great for them, but my guess is that they've reached the limits of easy explosive growth and have now matured their market segment. While non-GAAP is all fine and good, GAAP is what the Street and investors look at. So if they're projecting to lose -$0.44 a share, then yeah, they're going to have to downsize in order to reduce expenses to the point where they eliminate that loss going forward.

Aquisitions

[SpaceMonkies]

Look at their aquisitions:

Sendia (April 2006)[8] – now Force.com Mobile
Kieden (August 2006)[9] – now Salesforce for Google AdWords
Kenlet (January 2007) – original product CrispyNews used at Salesforce IdeaExchange[10] and Dell IdeaStorm[11] – now relaunched as Salesforce Ideas
Koral (March 2007) – now Salesforce Content
Instranet (August 2008) – now re-branded to Salesforce Knowledge
GroupSwim (December 2009) – now part of Salesforce Chatter
Informavores (December 2009)[12] – now re-branded to Visual Workflow
Jigsaw Data Corp. (April 2010),[13] – now known as Data.com
Sitemasher (June 2010) – now known as Site.com
Navajo Security (August 2011)[14]
Activa Live Chat (September 2010) – now known as Salesforce Live Agent[15]
Heroku (December 2010)[16]
Etacts (December 2010)[17]
Dimdim (January 2011)[18]
Manymoon (February 2011) – now known as Do.com[3]
Radian6 (March 2011)[19]
Assistly (September 21, 2011) – now known as Desk.com[20]
Model Metrics (November 2011)[21]
Rypple (December 2011)[22] – now known as Work.com
Stypi (May 2012)[23]
Buddy Media (May 2012) for US$689 million[24][25]
ChoicePass (June 2012)[26]
Thinkfuse (June 2012)[27]
BlueTail (July 2012) – now part of Data.com[28]
GoInstant (July 2012) for US$70 million [29]
clipboard.com (May 2013) for US$12 million [30]
ExactTarget (announced June 4, 2013) for US$2.5 billion[31]
EdgeSpring (June 7, 2013)[32]
-- http://en.wikipedia.org/wiki/Salesforce.com#Acquisitions

I can see why they need to 'reduce overlapping roles'!

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dead weight

[schematix]

It is quite normal that after a company has grown and hired more and more employees, that the time comes to get rid of those employees who didn't contribute the value that they are paid for. As uncomfortable as it is for someone to lose their job, most of the times it's not the productive people who are being let go - it's the dead weight. Truly good employees are hard to come by so if you happen to just be in the wrong place at the wrong time then it sucks, but you won't have a hard time finding a new job. Even in a less than stellar economy really good talent is always in strong demand. If you are incompetent, all bets are off and good luck to you.

Re:Go ahead

[LordLimecat]

If they are making money and can continue to deliver their product while reducing workforce, by what possible logic would you justify keeping on redundant jobs?

Might as well just donate the money to the workers if you wanted to do that, and call it the charity that it would be. Businesses exist to make money and provide a product, not to create jobs-- get over it.

Corporate Welfare

[Tridus]

This has been making a lot of news in Eastern Canada, because Salesforce (who bought local company Radian6) got a payroll grant from the government to go out and create 300 jobs with. ...

So naturally they cut a bunch of other jobs. The government has been scrambling ever since to not look like total morons for giving them money at all. Which is good, because corporate welfare schemes are always a ripoff for taxpayers and the only way it'll ever stop is if politicians start to get embarrassed for doing it.

Re:Go ahead

[penglust]

I mostly agree with you but just a couple of points.

1. Whenever a company uses the word "synergy" it make me believe they are using marketing hype and really don't have a clue if what they are going to try is the right thing or not.

2. If they really did not need them then why did they hire them in the first place? This hire - fire mentality really does just make companies look incompetent.

3. Its just a company to help dip shit salesmen darken my door so who really gives a shit anyway.

Re:Go ahead

[IANAAC]

Whenever a company uses the word "synergy" it make me believe they are using marketing hype and really don't have a clue if what they are going to try is the right thing or not.

Just once, I'd love to hear someone ask "What exactly do you mean by 'synergy?'" during one of these earnings calls, then listen to the hilarious, stumbling response. The word's been overused so much that it's lost its meaning.

Re:Go ahead

[JackieBrown]

2. If they really did not need them then why did they hire them in the first place? This hire - fire mentality really does just make companies look incompetent.

Most companies evolve and spots are no longer needed or new ones are. If they didn't do this, they would be critiqued for not keeping up with the changing landscape.

We mainly hire contract workers for our call center now so that we could avoid the hire-fire press.

There is a cost to hiring and firing people and most companies don't just do that on a whim. My job trains people for 4 weeks before even letting them talk to a customer. It takes several months to recoup the cost for just training. When we fire someone or reduce ("right-size") our workforce, there is a lot of cost to that as well (most obvious being unemployment benefits.)