/Salesforce cuts about 1,000 jobs even as stock has record one-day surge

Salesforce cuts about 1,000 jobs even as stock has record one-day surge

Marc Benioff, founder, chairman and co-CEO of Salesforce, speaks at an Economic Club of Washington luncheon in Washington, DC, on October 18, 2019.
NICHOLAS KAMM | AFP | Getty Images

Salesforce is cutting about 1,000 jobs, or close to 2% of its workforce, after a blowout earnings report pushed the stock up 26% to a record valuation on Wednesday.

“We’re reallocating resources to position the company for continued growth,” a spokesperson confirmed in a statement to CNBC. “This includes continuing to hire and redirecting some employees to fuel our strategic areas, and eliminating some positions that no longer map to our business priorities.”

Employees affected by the cuts are being given 60 days to find a new job within the company, the spokesperson said, and will have access to internal resources to help them in their search. Thus, the number who ultimately end up leaving the company could be far less than 1,000. 

For those who don’t land new positions, Salesforce will offer severance and pay benefits for six months. 

“We are helping them find the next step in their careers, whether within our company or a new opportunity,” the spokesperson said. The cuts were reported earlier by The Wall Street Journal

Salesforce shares jumped more than 26% on Wednesday — the stock’s best day ever, surpassing a 19% gain in November 2008. On Monday it was announced that the stock will be added to the Dow Jones Industrial Average, a change that will go into effect next week. It’s up 67% this year.

The news comes the day after Salesforce reported a quarterly profit of $ 2.63 billion on revenue of $ 5.15 billion, with revenue growth of 29% from the previous year. The company said it now expects total revenue of $ 20.7 billion to $ 20.8 billion in its current fiscal year, which ends next Jan. 31. 

Salesforce 2020 rally

Salesforce continues to hire rapidly and is preparing to list 300 new positions next week, according to a person familiar with the plans. 

At the end of March, CEO Marc Benioff pledged that the company wouldn’t lay off employees for 90 days as the spreading Covid-19 epidemic was shutting down much of the economy. That period ended around the end of June.

Mark Hawkins, Salesforce’s finance chief, said on Tuesday afternoon’s earnings call that the company is making “strategic shifts” that in part reflect the impact of the coronavirus on how and where people work. 

“This means we’ll be redirecting some of our resources to fuel growth and areas that are no longer as aligned with the business priority will be de-emphasized,” Hawkins said.

Correction: Salesforce joining the Dow Jones Industrial Average was announced Monday. An earlier version misstated the day.

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