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Jan 24, 2023

Elliott makes multi-billion-dollar play for Salesforce stock

Salesforce to cut 10 percent of workforce

Activist investor Elliott Investment Management is eyeing a multi-billion-dollar stake in software house Salesforce.

Elliott is the latest activist to join the cloud software group, which owns the Slack messaging platform. It follows closely behind the $8.4 bn hedge fund Starboard Value, which became a major shareholder in Salesforce in October last year.

At the time, Starboard said in a presentation that Salesforce’s shareholders had not seen the benefit of the company’s ‘strong market position’ over the past few years and the firm’s share price had ‘underperformed its benchmark indices, its closest peers and the broader market over the last three years.’

Elliot makes multi-billion-dollar play for Salesforce stock
Jesse Cohn, Elliott Management

Commenting on the share purchase, Jesse Cohn, managing partner at Elliott, says: ‘We have developed a deep respect for [Salesforce chair and co-CEO] Marc Benioff and what he has built. We look forward to working constructively with Salesforce to realize the value befitting a company of its stature.’

Founded in 1977, Elliott is one of the oldest fund managers in the world and as of June 30, 2022, it manages $55.7 bn in assets and employs 499 people.

‘We hired too many people’

Salesforce had previously announced a restructuring plan at the start of the year to reduce its operating costs and improve its operating margins. To implement its plans, however, the company said it would need to cut its workforce by approximately 10 percent.

In a letter addressed to employees in January, Benioff says the environment remains challenging and ‘with this in mind, we’ve made the very difficult decision to reduce our workforce by about 10 percent, mostly over the coming weeks.

‘I’ve been thinking a lot about how we came to this moment. As our revenue accelerated through the pandemic, we hired too many people leading into this economic downturn we’re now facing and I take responsibility for that.

‘Within the next hour, employees who are initially affected by this decision will receive an email letting them know. Our leadership will reach out directly to these employees and provide clarity for their teams about changes within their organizations.’

In its latest third quarter report, Salesforce raked in revenues of $7.84 bn and returned $1.7 bn to shareholders during the period.

IR Magazine has reached out to Salesforce for a comment.