Salesforce pulled out all the stops to convince investors that the AI revolution won’t be its death when it announced fourth-quarter earnings on Wednesday.
Salesforce reported a solid quarter of $10.7 billion in revenue, up 13% year-over-year. For the year, it reported $41.5 billion in revenue, up 10% over the previous year, with both results boosted by its $8 billion acquisition of data management company Informatica last May.
Net income landed at $7.46 billion, and the company offered strong guidance for the year ahead, projecting revenue of $45.8 billion to $46.2 billion — a 10% to 11% increase. It also said its “remaining performance obligation,” or RPO, is over $72 billion. That’s a figure that shows revenue under contact that has not yet been delivered or recognized as earned revenue.
The numbers, though, could only do so much. Software-as-a-service stocks, with Salesforce as their poster child, have been getting hammered lately. Investors fear the rise of AI agents will undermine these companies, making their per-employee-seat business models obsolete. The situation has been dubbed the “SaaSpocalypse.”
The concept hung so heavily in the air during the earnings call that CEO Marc Benioff mentioned the term at least six times.
“You’ve heard about the SaaSpocalypse? And it isn’t our first. We’ve had a few of them,” he said, later adding, “If there is a SaaSpocalypse, it may be eaten by the Sasquatch because there are a lot of companies using a lot of SaaS because it just got better with agents.”
In an attempt to convince the world of its continued health, Salesforce threw everything and the kitchen sink into this earnings report. The company increased its dividend by nearly 6% to $0.44 per share. It launched a new $50 billion share buyback program. That’s always a favorite with shareholders because it both creates a sturdy buyer of shares and reduces the number of shares in circulation (which can boost the stock price).
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The company also revamped the earnings call itself. It was part podcast, part infomercial, and part normal Q&A with a few questions from Wall Street analysts.
Instead of running through the numbers, Benioff interviewed three Salesforce customers on camera to testify to their love of its new agentic options: the CEO of home appliance company SharkNinja; the CEO of Wyndham Hotels and Resorts; and, just to hammer the point, the CEO of SaaStr, the software industry conference and media company. We’ll truncate the interviews to the shortest summary: They all love Salesforce’s AI agent products.
Salesforce also introduced a new metric for its agentic products: agentic work units (“AWU”). The idea here is that instead of simply counting “tokens” — the standard unit of AI processing volume — AWU attempts to measure something more meaningful: whether an agent actually completed a task. (Salesforce logged 19 trillion tokens last quarter, which sounds like a lot but really is not in the AI world.)
“You can ask it a question and it can write you a poem, but that’s not really all that valuable in the enterprise world,” Salesforce president and CMO Patrick Stokes said on the call. So AWU is intended to measure when the agent writes to a record or does some other verifiable piece of work.
On top of that, Salesforce also presented its own architectural vision of the coming world of agents. It shows SaaS software like itself owning most of the tech stack, with the AI model makers on the bottom as unseen, interchangeable, and commoditized work engines.
This was a direct counter to one of the causes of a SaaSpocalypse sell-off earlier this month, after OpenAI released its enterprise agent, Frontier. OpenAI’s architectural vision shows OpenAI owning most of the stack, with systems-of-record SaaS providers (the databases and business-software platforms where companies store their core data) on the bottom as the unseen engines.
And if all that wasn’t enough to influence investors: Benioff was dressed in a black leather jacket, echoing the signature look of the CEO clearly crushing it in the AI world: Nvidia’s Jensen Huang.
Imagine it is 1996. You log on to your desktop computer (which took several minutes to start up), listening to the rhythmic screech and hiss of the modem connecting you to the World Wide Web. You navigate to a clunky message board—like AOL or Prodigy—to discuss your favorite hobbies, from Beanie Babies to the newest mixtapes.
At the time, a little-known law called Section 230 of the Communications Safety Act had just been passed. The law—then just a 26-word document—created the modern internet. It was intended to protect “good samaritans” who moderate websites from regulation, placing the responsibility for content on individual users rather than the host company.
Today, the law remains largely the same despite evolutionary leaps in internet technology and pushback from critics, now among them Salesforce CEO Marc Benioff.
In a conversation at the World Economic Forum in Davos, Switzerland, on Tuesday, titled “Where Can New Growth Come From?” Benioff railed against Section 230, saying the law prevents tech giants from being held accountable for the dangers AI and social media pose.
“Things like Section 230 in the United States need to be reshaped because these tech companies will not be held responsible for the damage that they are basically doing to our families,” Benioff said in the panel conversation which also included Axa CEO Thomas Buberl, Alphabet President Ruth Porat, Emirati government official Khaldoon Khalifa Al Mubarak, and Bloomberg journalist Francine Lacqua.
As a growing number of children in the U.S. log onto AI and social media platforms, Benioff said the legislation threatens the safety of kids and families. The billionaire asked, “What’s more important to us, growth or our kids? What’s more important to us, growth or our families? Or, what’s more important, growth or the fundamental values of our society?”
Section 230 as a shield for tech firms
Tech companies have invoked Section 230 as a legal defense when dealing with issues of user harm, including in the 2019 case Force v. Facebook, where the court ruled the platform wasn’t liable for algorithms that connected members of Hamas after the terrorist organization used the platform to encourage murder in Israel. The law could shield tech companies from liability for harm AI platforms pose, including the production of deepfakes and AI-Generated sexual abuse material.
Benioff has been a vocal critic of Section 230 since 2019 and has repeatedly called for the legislation to be abolished.
In recent years, Section 230 has come under increasing public scrutiny as both Democrats and Republicans have grown skeptical of the legislation. In 2019 the Department of Justice under President Donald Trump pursued a broad review of Section 230. In May 2020, President Trump signed an Executive Order limiting tech platforms’ immunity after Twitter added fact-checks to his tweets. And in 2023, the U.S. Supreme Court heard Gonzalez v. Google, though, decided it on other grounds, leaving Section 230 intact.
In an interview with Fortune in December 2025, Dartmouth business school professor Scott Anthony voiced concern over the “guardrails” that were—and weren’t—happening with AI. When cars were first invented, he pointed out, it took time for speed limits and driver’s licenses to follow. Now with AI, “we’ve got the technology, we’re figuring out the norms, but the idea of, ‘Hey, let’s just keep our hands off,’ I think it’s just really bad.”
The decision to exempt platforms from liability, Anthony added, “I just think that it’s not been good for the world. And I think we are, unfortunately, making the mistake again with AI.”
For Benioff, the fight to repeal Section 230 is more than a push to regulate tech companies, but a reallocation of priorities toward safety and away from unfettered growth. “In the era of this incredible growth, we’re drunk on the growth,” Benioff said. “Let’s make sure that we use this moment also to remember that we’re also about values as well.”
Marc Benioff, co-founder and CEO of Salesforce, appears to be walking back comments calling for the National Guard to patrol San Francisco.
“Having listened closely to my fellow San Franciscans and our local officials, and after the largest and safest Dreamforce in our history, I do not believe the National Guard is needed to address safety in San Francisco,” Benioff said in a post on X. “My earlier comment came from an abundance of caution around the event, and I sincerely apologize for the concern it caused. “
While Benioff’s comments were apparently prompted by his concerns over public safety costs at the massive Dreamforce conference that the company held in San Francisco last week, the previously liberal-leaning billionaire also used the interview to embrace Trump, at one point saying, “I fully support the president,” and adding that Trump is “doing a great job.” (At the end of the interview, he reportedly asked his shocked PR person, “Too spicy?”)
And although Benioff’s pro-Trump stance seemingly aligns with a larger rightward shift among tech executives, his call for the National Guard to come to San Francisco quickly led to pushback from longtime allies and Democratic politicians. Well-known VC Ron Conway stepped down from the board of the Salesforce Foundation, with Conway reportedly telling Benioff in an email, “I now barely recognize the person I have so long admired.”
An event scheduled to feature Benioff and San Francisco Mayor Dan Lurie was also canceled, with organizers citing rain.
State Senator Scott Wiener, who represents San Francisco, told Politico, “I’m grateful that Marc walked back his call for the National Guard to be deployed in San Francisco. Marc has done so many good things for our city — and supported so many civic needs — and I’m glad to see this shift.”
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Trump has already deployed the National Guard in other cities including Washington, DC and Chicago, while a judge has thus far blocked his attempts to do the same in Portland. Illinois Governor JB Pritzker, a Democrat, has repeatedly described this as an “invasion” of his state.
SAN FRANCISCO — About 24 hours after President Trump declared San Francisco such a crime-ridden “mess” that he was recommending federal forces be sent to restore order, Manit Limlamai, 43, and Kai Saetern, 32, rolled their eyes at the suggestion.
The pair — both in the software industry — were with friends Thursday in Dolores Park, a vibrant green space with sweeping views of downtown, playing volleyball under a blue sky and shining autumn sun. All around them, people sat on benches with books, flew kites, played with dogs or otherwise lounged away the afternoon on blankets in the grass.
Both Limlamai and Saetern said San Francisco of course has issues, and some rougher neighborhoods — but that’s any city.
“I’ve lived here for 10 years and I haven’t felt unsafe, and I’ve lived all over the city,” Saetern said. “Every city has its problems, and I don’t think San Francisco is any different,” but “it’s not a hellscape,” said Limlamai, who has been in the city since 2021.
Both said Trump’s suggestion that he might send in troops was more alarming than reassuring — especially, Limlamai said, on top of his recent remark that American cities should serve as “training grounds” for U.S. military forces.
“I don’t think that’s appropriate at all,” he said. “The military is not trained to do what needs to be done in these cities.”
Across San Francisco, residents, visitors and prominent local leaders expressed similar ideas — if not much sharper condemnation of any troop deployment. None shied away from the fact that San Francisco has problems, especially with homelessness. Several also mentioned a creeping urban decay, and that the city needs a bit of a polish.
But federal troops? That was a hard no.
A range of people on Market Street in downtown San Francisco on Thursday.
“It’s just more of [Trump’s] insanity,” said Peter Hill, 81, as he played chess in a slightly edgier park near City Hall. Hill said using troops domestically was a fascist power play, and “a bad thing for the entire country.”
“It’s fascism,” agreed local activist Wendy Aragon, who was hailing a cab nearby. Her Latino family has been in the country for generations, she said, but she now fears speaking Spanish on the street given that immigration agents have admitted targeting people who look or sound Latino, and troops in the city would only exacerbate those fears. “My community is under attack right now.”
State Sen. Scott Wiener (D-San Francisco) said troop deployments to the city were “completely unnecessary” and “typical Trump: petty, vindictive retaliation.”
“He wants to attack anyone who he perceives as an enemy, and that includes cities, and so he started with L.A. and Southern California because of its large immigrant community, and then he proceeded to cities with large Black populations like Chicago, and now he’s moving on to cities that are just perceived as very lefty like Portland and now San Francisco,” Wiener said.
Abigail Jackson, a White House spokesperson, defended such deployments and noted crime reductions in cities, including Washington, D.C., and Memphis, where local officials — including D.C. Mayor Muriel Bowser, a Democrat — have embraced them.
“America’s once great cities have descended into chaos and crime as a result of Democrat policies that put criminals first and law-abiding citizens last. Making America Safe Again — especially crime-ridden cities — was a key campaign promise from the President that the American people elected him to fulfill,” Jackson said. “San Francisco Democrats should look at the tremendous results in DC and Memphis and listen to fellow Democrat Mayor Bowser and welcome the President in to clean up their city.”
A police officer shuts the door to his car after a person was allegedly caught carrying a knife near a sign promoting an AI-powered museum exhibit in downtown San Francisco.
A presidential ‘passion’
San Francisco — a bastion of liberal politics that overwhelmingly voted against Trump in the last election — has been derided by the conservative right for generations as a great American jewel lost to destructive progressive policies.
With its tech-heavy economy and downtown core hit hard by the pandemic and the nation’s shift toward remote work, the city has had a particularly rough go in recent years, which only exacerbated its image as a city in decline. That it produced some of Trump’s most prominent political opponents — including Gov. Gavin Newsom and former Vice President Kamala Harris — has only made it more of a punching bag.
In August, Trump suggested San Francisco needed federal intervention. “You look at what the Democrats have done to San Francisco — they’ve destroyed it,” he said in the Oval Office. “We’ll clean that one up, too.”
Then, earlier this month, to the chagrin of liberal leaders across the city, Marc Benioff, the billionaire Salesforce founder and Time magazine owner who has long been a booster of San Francisco, said in an interview with the New York Times that he supported Trump and welcomed Guard troops in the city.
“We don’t have enough cops, so if they can be cops, I’m all for it,” Benioff said, just as his company was preparing to open its annual Dreamforce convention in the city, complete with hundreds of private security officers.
The U.S. Constitution generally precludes military forces from serving in police roles in the U.S.
On Friday, Benioff reversed himself and apologized for his earlier stance. “Having listened closely to my fellow San Franciscans and our local officials, and after the largest and safest Dreamforce in our history, I do not believe the National Guard is needed to address safety in San Francisco,” he wrote on X.
He also apologized for “the concern” his earlier support for troops in the city had caused, and praised San Francisco’s new mayor, Daniel Lurie, for bringing crime down.
Billionaire Elon Musk, the chief executive of Tesla, also called for federal intervention in the city, writing on his X platform that downtown San Francisco is “a drug zombie apocalypse” and that federal intervention was “the only solution at this point.”
Trump made his latest remarks bashing San Francisco on Wednesday, again from the Oval Office.
Trump said it was “one of our great cities 10 years ago, 15 years ago,” but “now it’s a mess” — and that he was recommending federal forces move into the city to make it safer. “I’m gonna be strongly recommending — at the request of government officials, which is always nice — that you start looking at San Francisco,” he said to leading members of his law enforcement team.
Trump did not specify exactly what sort of deployment he meant, or which kinds of federal forces might be involved. He also didn’t say which local officials had allegedly requested help — a claim Wiener called a lie.
“Every American deserves to live in a community where they’re not afraid of being mugged, murdered, robbed, raped, assaulted or shot, and that’s exactly what our administration is working to deliver,” Trump said, before adding that sending federal forces into American cities had become “a passion” of his.
Kai Saetern, 32, was playing volleyball in Dolores Park on Thursday. Saetern said he has never felt unsafe living in neighborhoods all over the city for the last 10 years.
Crime is down citywide
The responses from San Francisco, both to Benioff and Trump, came swiftly, ranging from calm discouragement to full-blown outrage.
Lurie did not respond directly, but his office pointed reporters to his recent statements that crime is down 30% citywide, homicides are at a 70-year low, car break-ins are at a 22-year low and tent encampments are at their lowest number on record.
“We have a lot of work to do,” Lurie said. “But I trust our local law enforcement.”
San Francisco Dist. Atty. Brooke Jenkins was much more fiery, writing online that Trump and Homeland Security Secretary Kristi Noem had turned “so-called public safety and immigration enforcement into a form of government sponsored violence against U.S. citizens, families, and ethnic groups,” and that she stood ready to prosecute federal officers if they harm city residents.
Attendees exit the Dreamforce convention downtown on Thursday in San Francisco.
“If you come to San Francisco and illegally harass our residents … I will not hesitate to do my job and hold you accountable just like I do other violators of the law every single day,” she said.
Rep. Nancy Pelosi (D-San Francisco) — whose seat Wiener is reportedly going to seek — said the city “does not want or need Donald Trump’s chaos” and will continue to increase public safety locally and “without the interference of a President seeking headlines.”
Newsom said the use of federal troops in American cities is a “clear violation” of federal law, and that the state was prepared to challenge any such deployment to San Francisco in court, just as it challenged such deployments in Los Angeles earlier this year.
The federal appellate court that oversees California and much of the American West has so far allowed troops to remain in L.A., but is set to continue hearing arguments in the L.A. case soon.
Trump had used anti-immigration enforcement protests in L.A. as a justification to send troops there. In San Francisco, Newsom said, he lacks any justification or “pretext” whatsoever.
“There’s no existing protest at a federal building. There’s no operation that’s being impeded. I guess it’s just a ‘training ground’ for the President of United States,” Newsom said. “It is grossly illegal, it’s immoral, it’s rather delusional.”
Nancy DeStefanis, 76, a longtime labor and environmental activist who was at San Francisco City Hall on Thursday to complain about Golden Gate Park being shut to regular visitors for paid events, was similarly derisive of troops entering the city.
“As far as I’m concerned, and I think most San Franciscans are concerned, we don’t want troops here. We don’t need them,” she said.
Passengers walk past a cracked window from the Civic Center BART station in downtown San Francisco.
‘An image I don’t want to see’
Not far away, throngs of people wearing Dreamforce lanyards streamed in and out of the Moscone Center, heading back and forth to nearby Market Street and pouring into restaurants, coffee shops and take-out joints. The city’s problems — including homelessness and associated grittiness — were apparent at the corners of the crowds, even as chipper convention ambassadors and security officers moved would-be stragglers along.
Not everyone was keen to be identified discussing Trump or safety in the city, with some citing business reasons and others a fear of Trump retaliating against them. But lots of people had opinions.
Sanjiv, a self-described “techie” in his mid-50s, said he preferred to use only his first name because, although he is a U.S. citizen now, he emigrated from India and didn’t want to stick his neck out by publicly criticizing Trump.
He called homelessness a “rampant problem” in San Francisco, but less so than in the past — and hardly something that would justify sending in military troops.
“It’s absolutely ridiculous,” he said. “It’s not like the city’s under siege.”
Claire Roeland, 30, from Austin, Texas, said she has visited San Francisco a handful of times in recent years and had “mixed” experiences. She has family who live in surrounding neighborhoods and find it completely safe, she said, but when she’s in town it’s “predominantly in the business district” — where it’s hard not to be disheartened by the obvious suffering of people with addiction and mental illness and the grime that has accumulated in the emptied-out core.
“There’s a lot of unfortunate urban decay happening, and that makes you feel more unsafe than you actually are,” she said, but there isn’t “any realistic need to send in federal troops.”
She said she doesn’t know what troops would do other than confront homeless people, and “that’s an image I don’t want to see.”
Times staff writer Dakota Smith contributed to this report.
Marc Benioff has become the latest Silicon Valley tech leader to signal his approval of President Trump, saying that the president is doing a great job and ought to deploy the National Guard to deal with crime in San Francisco.
The Salesforce chief executive’s comments came as he headed to San Francisco to host his annual Dreamforce conference — an event for which he said he had to hire hundreds of off-duty police to provide security.
“We don’t have enough cops, so if they [National Guard] can be cops, I’m all for it,” he told the New York Times from aboard his private plane.
The National Guard is generally not allowed to perform domestic law enforcement duties when federalized by the president.
Last month, a federal judge ruled that Trump’s use of National Guard soldiers in Los Angeles violated the Posse Comitatus Act — which restricts use of the military for domestic law enforcement — and ordered that the troops not be used in law enforcement operations within California.
Trump has also ordered the National Guard to deploy to cities such as Portland, Ore., and Chicago, citing the need to protect federal officers and assets in the face of ongoing immigration protests. Those efforts have been met with criticism from local leaders and are the subject of ongoing legal battles.
President Trump has yet to direct troops to Northern California, but suggested in September that San Francisco could be a target for deployment. He has said that cities with Democratic political leadership such as San Francisco, Chicago and Los Angeles “are very unsafe places and we are going to straighten them out.”
“I told [Defense Secretary] Pete [Hegseth] we should use some of these dangerous cities as training for our military, our national guard,” Trump said.
Benioff’s call to send National Guard troops to San Francisco drew sharp rebukes from several of the region’s elected Democratic leaders.
San Francisco Dist. Atty. Brooke Jenkins said she “can’t be silent any longer” and threatened to prosecute any leaders or troops who harass residents in a fiery statement on X.
“I am responsible for holding criminals accountable, and that includes holding government and law enforcement officials too, when they cross the bounds of the law,” she said. “If you come to San Francisco and illegally harass our residents, use excessive force or cross any other boundaries that the law prescribes, I will not hesitate to do my job and hold you accountable just like I do other violators of the law every single day.”
State Sen. Scott Wiener (D-San Francisco) also took to X to express indignation, saying, “we neither need nor want an illegal military occupation in San Francisco.”
“Salesforce is a great San Francisco company that does so much good for our city,” he said. “Inviting Trump to send the National Guard here is not one of those good things. Quite the opposite.”
San Francisco Mayor Daniel Lurie’s office offered a more muted response, touting the mayor’s efforts to boost public safety in general, but declining to directly address Benioff’s remarks.
Charles Lutvak, a spokesperson for the mayor, noted that the city is seeing net gains in both police officers and sheriff’s deputies for the first time in a decade. He also highlighted Lurie’s efforts to bring police staffing up to 2,000 officers.
“Crime is down nearly 30% citywide and at its lowest point in decades,” Lutvak said. “We are moving in the right direction and will continue to prioritize safety and hiring while San Francisco law enforcement works every single day to keep our city safe.”
When contacted by The Times on Friday night, the office of Gov. Gavin Newsom, who vociferously opposed the deployment of National Guard troops in Los Angeles, did not issue a comment in response to Benioff.
Benioff and Newsom have long been considered friends, with a relationship dating back to when Newsom served as San Francisco’s mayor. Newsom even named Benioff as godfather to one of his children, according to the San Francisco Standard.
Benioff has often referred to himself as an independent. He has donated to several liberal causes, including a $30-million donation to UC San Francisco to study homelessness, and has contributed to prior political campaigns of former President Obama, former Vice President Kamala Harris, Sen. Cory Booker (D-N.J.), and Hillary Clinton.
However, he has also donated to the campaigns of former House Speaker Paul Ryan and Sen. John McCain, both Republicans, and supported tougher-on-crime policies and reducing government spending.
Earlier this year, Benioff also praised the Elon Musk-led federal cost-cutting effort known as the Department of Government Efficiency.
“I fully support the president,” Benioff told the New York Times this week. “I think he’s doing a great job.”
Marc Benioff has long been San Francisco’s liberal-leaning billionaire, the tech executive who funded homeless services, donated to the city’s public schools, and hosted Hillary Clinton fundraisers.
But in a new, wide-ranging phone interview with the New York Times from his private plane, Benioff revealed a political transformation that seemed to surprise even his own communications team, despite that Salesforce has hundreds of contracts with the federal government.
The Salesforce founder declared he “fully supported” President Trump and thought National Guard troops should patrol San Francisco streets. He gushed about sitting across from Trump at a Windsor Castle state dinner, telling the president “how grateful I am for everything he’s doing.” He praised Elon Musk’s government efficiency efforts and said he hadn’t closely followed news about immigration raids or Trump’s attacks on the media.
The 50-minute conversation reportedly ended after Benioff turned to his public relations executive, apparently noticing her expression. “What about the political questions?” he could be heard asking. “Too spicy?”
Though Benioff’s shift mirrors Silicon Valley’s broader accommodation of Trump, the exchange offered a rare glimpse of just how far that repositioning can go. The question now: will other Bay Area tech CEOs follow Benioff’s lead and call for federal troops in their own backyard?
Salesforce CEO Marc Benioff on Wednesday delivered a strong endorsement of Tesla’s Optimus humanoid robot, with a tweet and accompanying video declaring it the “dawn of the physical Agentforce revolution” and a “productivity game-changer” that could transform how businesses operate. His enthusiastic post endorses Tesla’s strategy and Elon Musk’s bold robotics ambitions.
“Elon’s Tesla Optimus is here! Dawn of the physical Agentforce revolution, tackling human work for $200K–$500K. Productivity game-changer!” Benioff wrote on X, adding a personal note: “Congrats @elonmusk, and thank you for always being so kind to me!” The tweet was accompanied by a video showing Benioff interacting directly with one of Tesla’s humanoid robots at the company’s California facility.
The casual exchange captured in the video offers a glimpse into the current capabilities, and limitations, of Tesla’s Optimus. When Benioff asks, “Hey, Optimus. What are you doing there?” the robot responds, “Just chilling, ready to help.” The conversation continues with Benioff requesting directions to find a Coke, to which Optimus replies, “Sorry, I don’t have real-time info, but I can take you to the kitchen if you want to check for a Coke there.” As they prepare to walk together, someone off-camera notes, “We need to give it a bit more room. Right now, it’s kind of paranoid about space. And it’ll be able to walk a lot faster, too.”
You can watch the full exchange below:
Elon’s Tesla Optimus 🤖🔥 is here! Dawn of the physical Agentforce revolution, tackling human work for $200K–$500K. Productivity game-changer! Congrats @elonmusk, and thank you for always being so kind to me! 🚀 #Tesla#Optimuspic.twitter.com/bA5IYIylE1
Tesla shares are holding steady at around $333 as of Thursday morning, but they’re up over 22% over the last six months. On Tuesday, Musk shared Tesla’s so-called “Master Plan Part IV,” which positions Optimus as central to the company’s future: The CEO claims “about 80% of Tesla’s value will eventually come from Optimus,” a projection that would value the robot program at roughly $20 trillion based on Tesla’s current market capitalization.
Musk set ambitious targets early in the year, predicting Tesla would manufacture thousands of Optimus units in 2025 and projecting the project could eventually generate more than $10 trillion in revenue. However, production plans encountered significant headwinds when China implemented export restrictions on rare-earth materials essential for the robots’ movement. During Tesla’s April earnings call, Musk explained a magnet issue was disrupting production timelines, noting that China required assurances the rare-earth magnets would not be used for military purposes, adding that Tesla was working with Beijing to secure the necessary export licenses. Optimus’ production challenges deepened in June when Milan Kovac, who had overseen Tesla’s Optimus development since 2022, stepped down to spend more time with family.
The projected price range for Tesla’s Optimus robot is between $15,000 and $30,000 at launch, with most recent updates suggesting the initial consumer models will be priced around $18,999 to $20,000, depending on features and configuration. Elon Musk and Tesla have publicly targeted keeping the price “under $20,000” for the base version, though more advanced or customized units could cost more.
Production reality check
While Musk’s rhetoric remains ambitious, the practical reality of bringing Optimus to market tells a more complex story. Tesla initially targeted producing 5,000 units by the end of 2025, but has manufactured only hundreds of prototypes so far. And with Kovac, the project’s original head, out, the program is now undergoing significant redesign under the leadership of Ashok Elluswamy, Tesla’s AI software vice president.
Technical challenges continue to plague the project. According to The Information, engineers have reportedly run into issues with joints overheating, limited battery life, difficulties achieving human-like dexterity in the robot’s hands, and overall efficiency. Tesla has reportedly stockpiled mostly complete robot bodies that are still missing critical components like hands and forearms, while production of these intricate parts lags behind. Meanwhile, current Optimus prototypes deployed in Tesla’s own battery workshops are apparently operating at less than half the efficiency of human workers. The company paused parts procurement in June to redesign core systems, with suppliers indicating the fixes could take months.
Tesla did not immediately respond to Fortune‘s request for comment.
“I’m not just managing human beings—I’m also managing agents, an entirely new type of digital labor,” Benioff said at the Salesforce 2.0 event last December. His vision extends beyond software to encompass robots as “physical manifestations of agents,” positioning companies like Tesla at the forefront of what could potentially be a trillion-dollar market opportunity.
While Musk has increasingly positioned Tesla as an AI and robotics company rather than a traditional automaker, skeptics point to Tesla’s history of ambitious timelines that have consistently been pushed back—I mean, just look at this list. Many of Musk’s previous promises remain unfulfilled. That said, the stakes for Optimus are enormous. If successful, Optimus could revitalize Tesla and revolutionize manufacturing, caregiving, and countless other industries while justifying Tesla’s premium valuation. If production challenges persist, it risks becoming another example of Musk’s tendency to overpromise on breakthrough technologies.
For this story, Fortune used generative AI to help with an initial draft. An editor verified the accuracy of the information before publishing.
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Marc Benioff, a guy who has poured money into artificial intelligence investments and claims that AI tools are doing half of the work at Salesforce, isn’t so sure about all the hype around this whole sector all of a sudden. During an appearance on the “20VC” podcast, as spotted by Business Insider, Benioff poured water on the concept of “artificial general intelligence,” calling the obsession around the industry’s white whale “hypnosis.”
During the conversation, podcast host Harry Stebbings—himself a venture capitalist who has lots of money tied up in the success of AI—pointed to a recent interview The Verge conducted with Amazon AGI Labs chief David Luan, in which Luan said there are fewer than 1,000 people in the world who would be “extremely valuable contributors” to building cutting edge AI systems. Benioff scoffed, not just at Luan’s statement but his very title. “AGI head, that sounds like an oxymoron,” the Salesforce CEO said.
Benioff explained that he’s skeptical of the very idea of artificial general intelligence, the theory that AI could one day develop human-like cognitive processing skills for reasoning and learning, rather than just spitting back outputs based on training data. “You’re talking to somebody who is extremely suspect if anybody uses those initials, ‘AGI,’” Benioff said. “I think that we have all been sold a lot of hypnosis around what’s about to happen with AI.”
He didn’t rule out the possibility of eventually achieving AGI, but stated, “I just realize that isn’t the state of technology today,” and noted that no AI that people have interacted with comes close to that theoretical bar. “It’s not a person, and it’s not intelligent, and it’s not conscious,” he said.
Benioff is right to sour on the idea of AGI, a concept that has only been muddied by the ongoing insistence by AI firms that it’s right around the corner. Sam Altman, head of OpenAI, recently conceded that his company’s latest model, GPT-5, is not AGI because it doesn’t “continuously learn.” Altman called the model “generally intelligent” but not AGI. Of course, the only official definition that OpenAI has for AGI isn’t a technical one but a monetary one. Microsoft and OpenAI agreed to define AGI as a system that can generate at least $100 billion in profits.
Of course, Benioff isn’t above AI hype, either. In addition to claiming that one of his companies has farmed out half of all work to AI, he also used the pages of Time Magazine—a publication he owns—to claim AI would result in “a revolution that will fundamentally redefine how humans work, live, and connect with one another.” Now, you won’t believe this, but Salesforce happens to sell AI agents. So Benioff certainly still believes in the AI hype for his own company’s products. It’s just everyone else who is overpromising.
For $2 a conversation, a new AI agent from Salesforce can answer questions from customers and schedule meetings — without a human being needed for oversight.
The AI agent technology, which Salesforce announced earlier this week at its annual Dreamforce event, has the potential to disrupt jobs currently held by human workers. Nearly three million people were employed as customer service representatives in 2022, with the majority (66%) being women, according to Data USA.
Salesforce knows that its new technology carries the power to replace what could have been human hires. Salesforce CEO Marc Benioff said on Tuesday that the new AI agents allow companies to forgo hiring new employees or “gig workers” in more hectic periods of time, per Bloomberg.
“We want to get a billion agents with our customers in the next 12 months,” Benioff said.
Salesforce CEO Marc Benioff. Photo by Justin Sullivan/Getty Images
One year ago, Klarna simply decided not to hire — not even replacements for people who left. Departing employees and an AI-induced hiring freeze have cut Klarna down from the 5,000-person workforce it was last year to the 3,800 people it had as of late August, without any layoffs.
In late August, Klarna CEO Sebastian Siemiatkowski told The Financial Times that the company wants to get its workforce down to 2,000 employees within the next few years with this approach.
“Not only can we do more with less, but we can do much more with less,” he told the Financial Times.
Klarna isn’t the only company using AI to automate tasks that humans once did. Within the next year, three in five large companies in the U.S. intend to use AI for everything from financial reporting to marketing campaigns, according to a June study from Duke University.
This year did not start off great for Salesforce, with an unusual level of turbulence and uncertainty surrounding the company. But as the year comes to a close, Salesforce finds itself in surprisingly good shape financially: Its stock is up over 96% year-to-date. Earlier this year, such an outcome would have seemed impossible to imagine.
The bad news started rolling in even before the new year began, when co-CEO Bret Taylor, who many speculated was being groomed to be heir apparent to Marc Benioff, quite suddenly announced he was leaving the company at the end of November. A week later, Slack CEO and co-founder Stewart Butterfield announced he, too, was stepping down. Losing two key executives in less than a week would be a huge hit to any company, but it would be just the start of an onslaught of bad news for the CRM giant.
As the year began, we learned that activist investors were, well, quite active inside the company. This included Elliott Management, Starboard Value, ValueAct Capital, Inclusive Capital and Third Point. When activists show up, they usually have a strong opinion on how to “fix” a company, and this would be no different.
First, we learned that Salesforce was bringing in three new board members, which felt like a way to appease the activists — especially because one of them was Mason Morfit, CEO and chief investment officer of ValueAct, one of those very same activists.
Activists typically pressure the company to cut costs, and in corporate terms, that usually means cutting staff. Sure enough, Salesforce soon announced that it was cutting 10% of its workforce, or 7,000 people, on January 4, 2023. The excuse was that it had overhired during the pandemic and this was a correction, but it could also have been throwing the activists a cost-cutting bone.
Either way, reports suggested the company didn’t handle the layoffs well, engineers were being pressured, and Benioff began preaching about going back to the office after embracing work from home, and what Salesforce called the “Digital HQ,” during the pandemic. The company’s reputation as a progressive, employee-friendly organization took a big hit.
For the first time in nearly two decades running JPMorgan Chase, CEO Jamie Dimon will voluntarily sell stock in the bank. The disclosure, in a securities filing Friday, detailed next year’s planned sales — pressuring JPMorgan (JPM) shares and the Dow Jones Industrial Average and highlighting why tracking trades made by executives involving the companies they lead should be an important part of every investor’s homework. Dimon is setting up the trades through a predetermined plan that executives at publicly traded companies use to protect against insider trading accusations. It will mark the first time that the 67-year-old CEO has offloaded shares of JPMorgan for non-technical reasons, such as exercising options. The planned sales – amounting to roughly 12% of the JPMorgan stock owned by Dimon and his family – are being done for tax planning and personal wealth diversification reasons, the bank said. Both are common reasons for executives to sell stock in their firms. The bank also said Dimon continues to believe JPMorgan’s prospects are “very strong,” and his planned trades are not related in any way to succession. Such sales are often seen when CEOs get close to retirement. As you can see, making sense of insider transactions can sometimes be a tall task. When they buy, it’s generally seen as an encouraging sign by Wall Street — and there is, perhaps, no better example of this than another move by Dimon in 2016, when he purchased JPMorgan stock. Fears of a weakening global economy sent stocks into a tailspin in early 2016, driving shares of JPMorgan down nearly 20% and the S & P 500 down more than 10% at their lows. But that weakness didn’t last long. The trajectory of the market changed just six weeks into the new year. That’s when Dimon disclosed — after the closing bell on Feb. 11, 2016 — that he bought 500,000 shares of the bank, worth about $26 million at the time. Dimon’s stock purchase , intended to show confidence in the financial sector, has become legendary on Wall Street. It ultimately coincided with — or perhaps was the reason for — the closing lows for not only shares of JPMorgan in 2016 but also the S & P 500 overall. Jim Cramer has since dubbed Feb. 11, 2016: “The Jamie Dimon Bottom.” JPMorgan finished up 30% that year, while the S & P 500 ended more than 9% higher — both huge turnarounds. While executive stock sales — such as Dimon’s planned transactions next year — are not universally red flags, they can get complicated. Case in point: Moderna (MRNA) and Pfizer (PFE) executives made a series of sales during the Covid-19 pandemic, as their companies worked to develop a vaccine for the virus. The rebuke in the court of public opinion and on Capitol Hill was sharp. Despite executing the sales through the same kind of predetermined plan that Dimon will use, the executives nevertheless faced criticism around the appearance of the sales, including from Jim . To remove any questions, he said at the time: “Memo to Moderna: You don’t have to sell. You can sit on it.” Jim was pointing out that predetermined sales can be canceled. Monitoring executive trades — both sales and purchases – is one piece to the larger buy-and-homework process that Jim advocates for investors who wants to own individual stocks. “In many cases, the insider sale might be immaterial,” according to Eliezer Fich, a finance professor at Drexel University, who has extensively researched executive stock trades. Still, investors should “absolutely” keep an eye on both types of transactions for any signals they send to the market, he said. At the Club, we view stock purchases by executives and directors as bullish indicators. The decision to buy stock — when a sizable portion of executive compensation packages are already equity-related — appears like a straightforward sign of confidence in the enterprise. The only reason an insider would buy is to make money, Jim often says. Stock sales, on the other hand, are more nuanced and may be harder to draw conclusions from, particularly with predetermined plans. There are many reasons an executive might choose to sell shares, including everything from tax purposes to personal wealth diversification – just like Dimon’s stated reasons for his planned sales. The Securities and Exchange Commission earlier this year enacted tougher disclosure rules for predetermined stock-trading arrangements — known as 10b5-1 plans — in an attempt to limit abuses, though many experts say there is still room for improvement. But, in general, the changes offer more assurance that stock sales are done in good faith. Plans made before then were grandfathered in. Insider stock sales Executive stock trades are usually disclosed through SEC filings known as Form 4 documents and accessible through the regulator’s EDGAR database — the electronic data gathering, analysis, and retrieval system. Thanks to the changes implemented earlier in 2023 , these filings now contain the most important piece of information for investors to make sense of a transaction: whether it took place as part of a Rule 10b5-1 trading plan, or was done on the open market. Of course, open-market sales are not automatically nefarious. But they will be viewed differently and often more critically than one completed through a Rule 10b5-1 plan, according to Chester Spatt, a finance professor at Carnegie Mellon’s Tepper School of Business and a former chief economist at the SEC. The very nature of their jobs means executives are in possession of material, non-public information quite frequently — and deciding to buy, or sell, stock based on that confidential info is against the law. At the same time, the market recognizes there’s an “important, legitimate basis for selling” stock, Spatt said, particularly because equity grants nowadays make up a large portion of their total compensation package. Rule 10b5-1 trading plans came into the fold just over two decades ago to reconcile these two discordant facts. Adopting Rule 10b5-1 trading plans gives public-company executives a way to protect against allegations of illegal insider trading in the future. Essentially, these plans allow executives to establish a plan for how — and when — they want to sell stock over a given period. Executives are supposed to adopt a plan in “good faith,” at a time when they did not possess material, non-public information. The plans can vary in structure and complexity, but generally must specify the amount, price and date on which the security will be sold, or bought. More complex plans may be structured around a formula that determines when and how much stock will be sold. Third-party brokers execute the trades. “The executive could say, ‘I’m going to be selling X amount of shares in three-month intervals over the next two years,” Fich, the Drexel University professor, explained in an interview with CNBC. “Nine months from now, one of those transactions is executed, and all of a sudden it happened to coincide with a patent approval that’s thought to be really, really important for the firm, which causes its stock price to increase. [The executive] can say, ‘Well, I set this up about a year ago. I didn’t know this was going to happen.’” Under the new SEC rules to address perceived shortcomings with 10b5-1 plans, a company’s executive officers and directors are now subject to a mandatory “cooling-off” period, which requires them to wait at least 90 days from the time a 10b5-1 plan is adopted or modified before they can trade. In a 2021 paper , researchers at Stanford University and the University of Pennsylvania’s Wharton School argued that short cooling-off periods — or none at all, with trades occurring the same day as adoption — were among the biggest red flags with Rule 10b5-1 plans. “We find that trades of plans with short cooling-off periods avoid significant losses and foreshadow considerable stock price declines that are well in excess of industry peers,” researchers wrote later in the paper. They added, “With longer cooling-off periods, opportunistic trading disappears.” Under the SEC modifications, companies now must disclose in their quarterly 10-Q and annual 10-K filings whether any officers and directors adopted, modified or terminated a Rule 10b5-1 plan during the reporting period. For example, in its most recent 10-Q , Club holding Meta Platforms (META) disclosed that Chief Financial Officer Susan Li entered into a Rule 10b5-1 trading plan during the three months ended June 30. The plan is scheduled to end Dec. 31, 2024, according to the filing. This new requirement seeks to partially address a shortcoming that academics including Drexel’s Fich have highlighted in research on executive stock trades: The ability to opportunistically cancel, or change them, without notice to the investing public. While a plan cannot be modified if the executive is in possession of material, non-public information, it can technically be canceled at any time , Stanford and Wharton researchers noted. In the past, there would never be an SEC filing for a trade that didn’t occur because of a terminated plan. Not anymore, which is good news for investors because the additional information around plan adoption, modification and cancellation can, over time, help investors appropriately interpret the insider stock sales. Drexel’s Fich said he believes a major lingering “loophole” with Rule 10b5-1 trading plans is the use of limit orders, which in practice can prevent stock from being sold if it falls below a certain price on the day it was supposed to be sold. In its December 2022 report announcing amendments to Rule 10b5-1, the SEC said insiders may use limit orders in their trading plans to help protect against “significant market fluctuations” over the months “and even years” that the plans are in effect. In that same report, the U.S. regulator indicated it was concerned about “abnormally profitable insider trading under Rule 10b5-1,” which has been documented in various academic studies. However, it said it appears limit order use “cannot account for the entirety of the abnormal returns documented” in research studies. The SEC opted to still permit the use of limit orders, given that enhanced disclosure requirements may make it easier for other market participants to “gauge some information about the officer’s or director’s trading strategy,” and possibly sell ahead of them, pushing down the stock price by the time the executive’s next tranche of sales is executed. The SEC’s new rules also limited executives’ ability to have multiple overlapping plans and placed restrictions on the use of single-trade plans — two additional practices that had drawn scrutiny. Now, executives can only employ one single-trade plan over a 12-month period. 10b5-1 sale questions To place executive stock sales in the proper context, investors should consider how much stock in the company the insider owns after the trade is completed. Fich told CNBC he asks that question regularly. As an example, he pointed to sales by a handful of executives at Coca-Cola (KO) earlier this year that he chalked up as the non-concerning variety. “There might be some troubling sales, in general, when many executives are selling a lot of shares at the same time,” Fich acknowledged, but Coke’s recent history doesn’t rise to that level when considering the larger picture. “Coca-Cola insiders sold about $2.7 million worth of shares over the past three months, but these guys own $1.8 billion worth of shares” in a company with a market value over $200 billion, Fich explained in early August. “So, I’m not worried.” In a follow-up exchange with CNBC, Fich also noted the net effect of Coke’s insider sales was partially offset by the exercise of stock options. Such was the case with Chief Technical Officer Nancy Quan’s trades in early May, according to Form 4 filings . Quan exercised stock options that resulted in the acquisition of 75,826 shares, on May 2, and the same day sold 85,906 shares. She owned 219,790 shares of Coke before the two transactions, and ended the day owning 209,710 — a decrease of only 4.6%. This illustrates that, with insider sales, the devil is in the details. Putting it all together, executive stock sales that amount to only a tiny fraction of an insider’s overall holdings are unlikely to be cause for immediate concern — just like recent transactions from Salesforce co-founder and CEO Marc Benioff. Despite a steady series of sales since mid-July, Benioff’s overall stake in Club name Salesforce (CRM) has declined only 4.6%, to around 25.27 million shares, securities filings show. Benioff remains the largest individual shareholder in Salesforce, owning a 2.6% stake that’s worth around $5.2 billion based on recent stock prices. Put another way, Benioff’s sales have been relatively minor, considering how much Salesforce stock he still owns, and how much his economic interests still align with the rest of the customer-relationship-management software group’s shareholders. Another assuring fact: Benioff’s sales continued to occur, even as Salesforce’s stock declined from around $229 per share in July, to around $205 this month. CRM YTD mountain Salesforce YTD Investors should also consider executives’ individual histories when assessing their latest transactions, Carnegie Mellon’s Spatt suggested. “If the executive has a history of selling a certain number of shares — or a fraction of his portfolio — each period, I’d be less concerned about that than I would be with very spikey and unusual sales,” Spatt said. This is hardly the first time Benioff has steadily sold shares of Salesforce, not in conjunction with the conversion of stock options. For example, a similar sequence took place beginning in September 2020 and continued through October. He also sold a basket of stock in November 2021 and November 2022, according to SEC filings reviewed by CNBC. Insider stock buys After the stock market closed on May 12, 2022, then-interim Starbucks CEO Howard Schultz disclosed in an SEC filing that he had bought roughly $10 million worth of the coffee chain’s stock. It came at a rocky time for the company, as it sought to counter a growing unionization push among its baristas. On that day, Starbucks (SBUX) shares had closed under $70 each for the first time since April 7, 2022 — in the throes of the first wave of the Covid pandemic while stores were temporarily shuttered. In the first trading session after Schultz’s May 2022 announcement, shares of Starbucks soared 8.15%. The market’s reaction to Schultz’s purchase demonstrates that Wall Street — and the Club, too — likes to see insiders buying their own stock. We started a position in August 2022, shortly after the Schultz buy. It’s typically interpreted as a sign of confidence in the company’s outlook. Otherwise, the thinking goes, why would the executive put their own cash to work when so much of their compensation is already coming in the form of securities? “It’s not so common for the executives to be buying stock in the company,” said Carnegie Mellon’s Spatt. “In and of itself, that’s part of the reason why it’s a pretty positive signal. … The executive is naturally so long in the stock, because of the structure of his compensation. For the executive to be buying … that must mean he’s very optimistic.” That’s the message we took in June 2018, when Nikesh Arora was appointed CEO of Palo Alto Networks (PANW). Not long after, Arora bought around $20 million worth of stock in the cybersecurity firm in open-market transactions. PANW mountain 2019-06-01 Palo Alto Networks’ stock performance since June 2019, when Nikesh Arora took over as CEO. Arora’s big bet helped attract us to Palo Alto Networks for the first time, realizing that the executive was quite literally putting his money where his mouth was. Although we left the stock for a few years, beginning in September 2019, we returned in February as the seeds Arora planted upon his arrival were sprouting a story too good to ignore any longer. More recently, Broadcom (AVGO) board member Check Kian Low bought $9.6 million worth of stock in the company following its post-earnings decline — more than tripling his stake, to 15,951 shares. AVGO YTD mountain Broadcom YTD Jim believes there was initial confusion about Low’s reason for buying — namely, was it to meet minimum-ownership levels required by Broadcom board members? That has since been proven to be an open-market purchase. And, we take that as a very encouraging sign for one of the newest Club holdings. In moments of market-wide turmoil, executive stock purchases can take on broader importance to the rest of the investment community, soothing collective fears. Such was the case with Dimon’s now-legendary purchase in 2016. The increased insider buying activity observed in March 2020, as the pandemic roiled global stock markets, also was viewed at the time as a strong expression of confidence on top of the unprecedented monetary stimulus unleashed by the Federal Reserve. The S & P 500’s Covid-era low came on March 23, 2020. Since then, the index has roughly doubled. Insider buying in March 2020 – including about $5 million from Charles Scharf, CEO of Club holding Wells Fargo (WFC) — reached its highest level since March 2009, CNBC reported at the time , citing data from Washington Service, a firm that tracks such transactions. As it happens, March 2009 is the same month the S & P 500 hit its global financial crisis low . To be sure, even though executive stock purchases are a bullish signal, that doesn’t mean future gains for the stock are automatic, cautioned Columbia Business School professor Sehwa Kim. Investors should be mindful that some executives may be “overconfident about their capability” to create value at a firm when they decide to buy its stock, Kim said in an interview with CNBC. “Whether the firm’s prospect is truly good or not, they have a strong belief in their ability,” he said. Club holding Foot Locker (FL) offers a lesson in interpreting insider purchases, and the patience that investing in the stock market requires. FL YTD mountain Foot Locker YTD This year, Foot Locker CEO Mary Dillon, revered for turning around at Ulta Beauty (ULTA), has twice bought stock in open-market transactions — buying about $501,000 worth of shares on March 28, then nearly $250,000 worth about two months later, on May 30. The first purchase of 12,614 shares came at an average price of $39.74, not long after Foot Locker held an Investor Day that detailed Dillon’s revitalization strategy for the company. That excited Wall Street analysts and investors, including our portfolio managers at the Club. The second buy, which totaled 9,525 shares, came at $26.20 each, on average. As those dramatically different price levels indicate, a lot happened to the market’s perception of Foot Locker between those two transactions. The main turning point arrived May 19, when the company’s disappointing first-quarter earnings report and revised guidance sent shares tumbling 27%. Right now, Dillon may very well be as optimistic on Foot Locker’s long-term prospects as she was in late March when buying that first tranche of stock — even if she’s underwater on that lot. She signaled as much to the market with May’s purchase and in September when she bought $100,000 worth of Foot Locker stock, at an average of $18.17 per share. These transactions might offer a modicum of assurance, but don’t completely change the reality that this year has been a roller coaster for shareholders. Foot Locker shows that the favorable signal being sent by an executive stock purchase might be obscured, or forgotten, by other, more-pressing facts. In the retailer’s case, its first-quarter results and lowered outlook — dragged down by discounting and inventory issues – painted an uglier near-term picture than any insider buys. Indeed, even after Dillon’s second buy on May 30, Foot Locker shares fell on May 31 and June 1. To be sure, the message Dillon attempted to send may breakthrough down the road as the turnaround plan progresses. While disappointed in the performance of Foot Locker shares, we recognize that overhauling a troubled company takes time — even if it’s taking longer than we thought. Bottom line As part of the buy-and-homework process, we keep tabs on how executives, particularly in the C-suite, are trading their own stock while recognizing it’s only one piece of the larger investment-research puzzle. Insider stock sales are best analyzed with a big-picture context, given we know that some sales can be misinterpreted for reasons that include optics, like when the CEOs of drug companies making Covid vaccines were selling stock through predetermined plans and making huge profits. The necessary context starts with understanding whether the trade was made pursuant to a Rule 10b5-1 plan. Fortunately, the new SEC rules should enhance transparency. Then, taking into account the selling executives’ remaining ownership and previous history adds a more robust frame of reference. On the other side, the market views executive stock purchases quite favorably, and so does the Club. Compared with a tiny stock sale executed through a predetermined plan, executive stock buys generally send a much stronger signal: The executive wants to make money, too. And in some cases, like in the case of huge stock buybacks by a company, we’re happy to be right there to buy alongside them. (Jim Cramer’s Charitable Trust is long WFC, META, AVGO, FL, CRM and SBUX. See here for a full list of the stocks.) As a subscriber to the CNBC Investing Club with Jim Cramer, you will receive a trade alert before Jim makes a trade. Jim waits 45 minutes after sending a trade alert before buying or selling a stock in his charitable trust’s portfolio. If Jim has talked about a stock on CNBC TV, he waits 72 hours after issuing the trade alert before executing the trade. THE ABOVE INVESTING CLUB INFORMATION IS SUBJECT TO OUR TERMS AND CONDITIONS AND PRIVACY POLICY , TOGETHER WITH OUR DISCLAIMER . NO FIDUCIARY OBLIGATION OR DUTY EXISTS, OR IS CREATED, BY VIRTUE OF YOUR RECEIPT OF ANY INFORMATION PROVIDED IN CONNECTION WITH THE INVESTING CLUB. NO SPECIFIC OUTCOME OR PROFIT IS GUARANTEED.
Jamie Dimon, chairman and chief executive officer of JPMorgan Chase & Co. says the new U.K. government should be “given the benefit of the doubt.”
Al Drago | Bloomberg | Getty Images
For the first time in nearly two decades running JPMorgan Chase, CEO Jamie Dimon will voluntarily sell stock in the bank.
The disclosure, in a securities filing Friday, detailed next year’s planned sales — pressuring JPMorgan (JPM) shares and the Dow Jones Industrial Average and highlighting why tracking trades made by executives involving the companies they lead should be an important part of every investor’s homework.
Dimon is setting up the trades through a predetermined plan that executives at publicly traded companies use to protect against insider trading accusations. It will mark the first time that the 67-year-old CEO has offloaded shares of JPMorgan for non-technical reasons, such as exercising options.
The planned sales – amounting to roughly 12% of the JPMorgan stock owned by Dimon and his family – are being done for tax planning and personal wealth diversification reasons, the bank said. Both are common reasons for executives to sell stock in their firms. The bank also said Dimon continues to believe JPMorgan’s prospects are “very strong,” and his planned trades are not related in any way to succession. Such sales are often seen when CEOs get close to retirement.
As you can see, making sense of insider transactions can sometimes be a tall task.
When they buy, it’s generally seen as an encouraging sign by Wall Street — and there is, perhaps, no better example of this than another move by Dimon in 2016, when he purchased JPMorgan stock.
Fears of a weakening global economy sent stocks into a tailspin in early 2016, driving shares of JPMorgan down nearly 20% and the S&P 500 down more than 10% at their lows.
But that weakness didn’t last long.
The trajectory of the market changed just six weeks into the new year. That’s when Dimon disclosed — after the closing bell on Feb. 11, 2016 — that he bought 500,000 shares of the bank, worth about $26 million at the time.
Dimon’s stock purchase, intended to show confidence in the financial sector, has become legendary on Wall Street. It ultimately coincided with — or perhaps was the reason for — the closing lows for not only shares of JPMorgan in 2016 but also the S&P 500 overall.
Jim Cramer has since dubbed Feb. 11, 2016: “The Jamie Dimon Bottom.” JPMorgan finished up 30% that year, while the S&P 500 ended more than 9% higher — both huge turnarounds.
While executive stock sales — such as Dimon’s planned transactions next year — are not universally red flags, they can get complicated.
Jim Cramer suggested Saturday that plans for a leadership change at Club holding Salesforce (CRM) — helmed by co-founder Marc Benioff for more than two decades — may be disclosed in the near future. “There will be a good chance that Marc will [soon] announce a successor or Marc will announce that he will [only] be chairman,” Jim said Saturday during the Club’s first-ever “Annual Meeting” in New York City before a live audience. Benioff, an influential Silicon Valley entrepreneur and philanthropist, is currently chairman and CEO. Such a development would come after five activist investors — including the venerable hedge fund Elliott Management — have recently built stakes in the enterprise software maker, which is set to report fourth-quarter earnings after the closing bell Wednesday. Activist investors take positions in companies and push for changes to address what they perceive as problems, in hopes that fixing them will boost shareholder value. It’s a bit unusual to see five activists targeting the same company . But the pressure has been mounting since October, when Jeff Smith’s Starboard Value announced a position in Salesforce, lamenting what they felt has been a “subpar mix of growth and profitability” at the company in recent years. CRM YTD mountain Salesforce (CRM) YTD performance In early January, Salesforce announced a cost-cutting plan that included layoffs and office space reductions — moves that Jim has said were pushed for by Starboard . The extent of the activist involvement became clear not long after. It’s now known that Elliott Management, ValueAct, Jeff Ubben’s Inclusive Capital and Dan Loeb’s Third Point also built positions in Salesforce. ValueAct CEO Mason Morfit was named to Salesforce’s board of directors in late January, along with former Carnival cruise line CEO Arnold Donald and Mastercard finance chief Sachin Mehra. Despite that shakeup, Paul Singer’s Elliott was reportedly planning to nominate its own candidates for Salesforce’s board. CNBC’s David Faber reported last week that Elliott and Salesforce were in talks to avoid a proxy fight It’s not unusual for tech founders to eventually step aside as the company matures, and questions around succession at Salesforce have swirled for years. While Benioff has said he’s “never leaving” Salesforce , the company has twice elevated an executive to the role of co-CEO. First, it was Keith Block, who held the role from August 2018 to February 2020. More recently, Bret Taylor served as co-CEO from November 2021 to Jan. 31 of this year. Salesforce did not immediately respond to CNBC’s request for comment on Jim’s remarks Saturday. Bottom line It’s no secret Jim has been a fan of Benioff and a Salesforce shareholder for the Club for a long time. Jim readily admits that he counts Marc as a friend. But he stressed on the stage, “I know it’s not about friends. It’s about money,” underscoring his allegiance is always to make money for Club members. Jim said he wishes that the activists would leave Benioff alone. “I have counseled the activist that the one thing you don’t do is make it so he [Benioff] gets up that morning and says, ‘I don’t want anything to do with this,’” Jim warned. When it comes down to it, Jim said Salesforce has a great product, but acknowledged it’s a tough environment right now for enterprise software. But he said Benioff has made investors a lot of money over the years, and the activists should let Benioff do what he wants to do. (Jim Cramer’s Charitable Trust is long CRM. See here for a full list of the stocks.) As a subscriber to the CNBC Investing Club with Jim Cramer, you will receive a trade alert before Jim makes a trade. Jim waits 45 minutes after sending a trade alert before buying or selling a stock in his charitable trust’s portfolio. If Jim has talked about a stock on CNBC TV, he waits 72 hours after issuing the trade alert before executing the trade. THE ABOVE INVESTING CLUB INFORMATION IS SUBJECT TO OUR TERMS AND CONDITIONS AND PRIVACY POLICY , TOGETHER WITH OUR DISCLAIMER . NO FIDUCIARY OBLIGATION OR DUTY EXISTS, OR IS CREATED, BY VIRTUE OF YOUR RECEIPT OF ANY INFORMATION PROVIDED IN CONNECTION WITH THE INVESTING CLUB. NO SPECIFIC OUTCOME OR PROFIT IS GUARANTEED.
Marc Benioff, founder, chairman and CEO of enterprise cloud computing company Salesforce.
Kim Kulish | Corbis News | Getty Images
Jim Cramer suggested Saturday that plans for a leadership change at Club holding Salesforce (CRM) — helmed by co-founder Marc Benioff for more than two decades — may be disclosed in the near future.
“I’m confident that Microsoft will emerge from this stronger and more competitive,” CEO Satya Nadella announced in a memo to employees that was posted on the company website Wednesday. Some employees will find out this week if they’re losing their jobs, he wrote.
Earlier this month, Amazon CEO Andy Jassy said the company was planning to lay off more than 18,000 employees, primarily in its human resources and stores divisions. It came after Amazon said in November it was looking to cut staff, including in its devices and recruiting organizations. CNBC reported at the time that the company was looking to lay off about 10,000 employees.
Amazon went on a hiring spree during the Covid-19 pandemic. The company’s global workforce swelled to more than 1.6 million by the end of 2021, up from 798,000 in the fourth quarter of 2019.
Google parent company Alphabet had largely avoided layoffs until January, when it cut 15% of employees from Verily, its health sciences division. Google itself has not undertaken any significant layoffs as of Jan. 18, but employees are increasingly growing worried that the ax may soon fall.
Crypto.com announced plans to lay off 20% of its workforce Jan. 13. The company had 2,450 employees, according to PitchBook data, suggesting around 490 employees were laid off.
CEO Kris Marszalek said in a blog post that the crypto exchange grew “ambitiously” but was unable to weather the collapse of Sam Bankman-Fried’s crypto empire FTX without the further cuts.
“All impacted personnel have already been notified,” Marszalek said in a post.
The exchange plans to cut 950jobs, according to a blog post. Coinbase, which had roughly 4,700 employees as of the end of September, had already slashed 18% of its workforce in June saying it needed to manage costs after growing “too quickly” during the bull market.
“With perfect hindsight, looking back, we should have done more,” CEO Brian Armstrong told CNBC in a phone interview at the time. “The best you can do is react quickly once information becomes available, and that’s what we’re doing in this case.”
In a letter to employees, co-CEO Marc Benioff said customers have been more “measured” in their purchasing decisions given the challenging macroeconomic environment, which led Salesforce to make the “very difficult decision” to lay off workers.
Salesforce said it will record charges of $1 billion to $1.4 billion related to the headcount reductions, and $450 million to $650 million related to the office space reductions.
Meta‘s disappointing guidance for the fourth quarter of 2022 wiped out one-fourth of the company’s market cap and pushed the stock to its lowest level since 2016.
The tech giant’s cuts come after it expanded headcount by about 60% during the pandemic. The business has been hurt by competition from rivals such as TikTok, a broad slowdown in online ad spending and challenges from Apple’s iOS changes.
Lyftannounced in November that it cut 13% of its staff, or about 700 jobs. In a letter to employees, CEO Logan Green and President John Zimmer pointed to “a probable recession sometime in the next year” and rising ride-share insurance costs.
For laid-off workers, the ride-hailing company promised 10 weeks of pay, health care coverage through the end of April, accelerated equity vesting for the Nov. 20 vesting date and recruiting assistance. Workers who had been at the company for more than four years will get an extra four weeks of pay, they added.
CEO Patrick Collison wrote in a memo to staff that the cuts were necessary amid rising inflation, fears of a looming recession, higher interest rates, energy shocks, tighter investment budgets and sparser startup funding. Taken together, these factors signal “that 2022 represents the beginning of a different economic climate,” he said.
Stripe was valued at $95 billion last year, and reportedly lowered its internal valuation to $74 billion in July.
In a memo to staff, CEO Tobi Lutke acknowledged he had misjudged how long the pandemic-driven e-commerce boom would last, and said the company is being hit by a broader pullback in online spending. Its stock price is down 78% in 2022.
Netflix announced two rounds of layoffs. In May, the streaming service eliminated 150 jobs after the company reported its first subscriber loss in a decade. In late June, it announced another 300 layoffs.
In a statement to employees, Netflix said, “While we continue to invest significantly in the business, we made these adjustments so that our costs are growing in line with our slower revenue growth.”
Snap CEO Evan Spiegel told employees in a memo that the company needs to restructure its business to deal with its financial challenges. He said the company’s quarterly year-over-year revenue growth rate of 8% “is well below what we were expecting earlier this year.”
Retail brokerage firm Robinhood slashed 23% of its staff in August, after cutting 9% of its workforce in April. Based on public filings and reports, that amounts to more than 1,100 employees.
Robinhood CEO Vlad Tenev blamed “deterioration of the macro environment, with inflation at 40-year highs accompanied by a broad crypto market crash.”
“Tesla will be reducing salaried headcount by 10% as we have become overstaffed in many areas,” Musk wrote. “Note this does not apply to anyone actually building cars, battery packs or installing solar. Hourly headcount will increase.”
DAVOS, Switzerland – The finance and tech CEOs gathering at the World Economic Forum this week expressed measured optimism about the economy in 2023 — but at least one major risk looms for markets, they said.
The resilient U.S. economy, a mild European winter and China’s reopening have given investors and forecasters hope that a severe recession can be avoided, Citigroup CEO Jane Fraser told CNBC’s Sara Eisen on Tuesday.
“All in all, the year has started off better than everyone expected,” Fraser said. “Everyone’s converging now in the states more around a mild, manageable recessionary scenario, driven by the strength that we’ve got in the labor markets.”
The U.S. economy has slowed since the Federal Reserve began raising interest rates last year, sowing fears that a recession was unavoidable.
In the early weeks of 2023, investors have begun to hope that moderating inflation and strong employment figures could result in a so-called soft landing. But budding optimism at the annual meeting of billionaires, heads of state and business leaders in the Swiss Alps collided with a fresh threat, on top of existing concerns including the Ukraine war and global climate change.
The world’s largest economy risks defaulting on its debt for the first time in modern history this summer as politicians wrangle over raising the country’s debt limit, currently capped at $31.4 trillion. The U.S. is expected to reach its debt limit Thursday, Treasury Secretary Janet Yellen said last week. After that, the Treasury will find ways to fund their debt obligations until at least early June, Yellen said.
That sets up a standoff in Congress in the weeks ahead. Republicans and Democrats will engage in brinkmanship over political goals. The last time a potential default risk surfaced was in 2011, when lawmakers averted disaster after markets convulsed and the U.S. had its credit rating downgraded.
“I don’t think anybody knows what would happen if they really went further than what happened in 2011,” the CEO of a Wall Street bank said on the sidelines of the conference. “That’s why it’s scary.”
The CEO, who declined to be identified speaking candidly, said he had just met a group of U.S. lawmakers worried about the coming impasse.
“It would affect markets and it would be a drag on economic activity because of the uncertainty,” he said. “It would be really bad for us.”
But coming to a deal to increase the U.S. debt limit won’t be easy in a political environment that’s grown even more polarized in the past decade.
Addressing the debt ceiling “is going to be hard,” said Salesforce CEO Marc Benioff on Wednesday. House Speaker Kevin McCarthy, R-Calif., has “got to handle it, but he’s got a lot of issues,” he said.
The newly elected McCarthy is in a bind. While conservative members of his caucus insist they do not want the country to default on its debt, McCarthy is under pressure to demand deep spending cuts. McCarthy has suggested that he won’t support raising the debt ceiling without a compromise on spending.
The situation is a “mess” with at least one possible solution: Congress could pass a “clean debt limit,” according to Peter Orszag, CEO of financial advisory at Lazard. That refers to a borrowing increase without spending cuts.
McCarthy, however, would likely not survive as speaker if he agreed to that, Orszag said.
Another top Wall Street CEO said he planned to push lawmakers at Davos to focus more on spending cuts rather than the debt ceiling.
The worries contrast with early signs this month that formerly frozen markets have begun to awaken. For instance, debt issuance has been “incredibly strong” in January so far, according to Fraser.
It’s too early to say whether those signs are a harbinger of better times for investment banks and the wider economy, she said.
Shortly before Thanksgiving, Amazon CEO Andy Jassy confirmed rumors that layoffs had begun in multiple departments at the e-commerce giant and said it would review staffing needs into the new year.
On Wednesday, Jassy provided a sobering update on that review: Amazon is cutting more than 18,000 jobs, nearly double the 10,000 that had previously been reported and marking the highest absolute number of layoffs of any tech company in the recent downturn.
At Amazon and other tech companies, the second half of last year was marked by hiring freezes, layoffs and other cost-cutting measures at a number of household names in Silicon Valley. But if 2022 was the year the good times ended for these tech companies, 2023 is already shaping up to be a year when people at those companies brace for how much worse things can get.
On the same day Amazon announced layoffs, cloud-computing company Salesforce said it was axing about 10% of its staff – a figure that easily amounts to thousands of workers – and video-sharing outlet Vimeo said it was cutting 11% of its workforce. The following day, digital fashion platform Stitch Fix said it planned to cut 20% of its salaried staff, after having cut 15% of its salaried staff last year.
The continued fallout in the industry comes as tech firms grapple with a seemingly perfect storm of factors. After initially seeing a boom in demand for digital services amid the onset of the pandemic, many companies aggressively hired. Then came a whiplash in demand as Covid-19 restrictions receded and people returned to their offline lives. Rising interest rates also dried up the easy money tech companies relied on to fuel big bets on future innovations, and cut into their sky-high valuations.
Heading into 2023, recession fears and economic uncertainties are still weighing heavily on consumers and policymakers’ minds, and interest rate hikes are expected to continue. Beyond that, the growing number of layoffs may also give certain tech companies some cover to take more severe steps to trim costs now than they may have otherwise done.
While there have been some layoffs recently in the consumer goods sector and hints of more to come elsewhere, the situation in Silicon Valley remains in stark contrast to the economy as a whole.
The Labor Department’s latest employment report on Friday pointed to a year of extraordinary job growth in 2022, marking the second-best year for the labor market in records that go back to 1939. Meanwhile, a separate report from outplacement firm Challenger, Gray & Christmas foundtech layoffs were up 649% in 2022 compared to the previous year, versus just a 13% uptick in job cuts in the overall economy during the same period.
In his note to employees this month, Jassy chalked up the need for significant cost cutting at Amazon to “the uncertain economy and that we’ve hired rapidly over the last several years.” Others across the industry have echoed those points, with varying degrees of atonement.
In a series of apologies that are beginning to sound the same, Silicon Valley business leaders from Meta’s Mark Zuckerberg to Salesforce’ Marc Benioff have blamed the wave of job cuts on their own misreading of how pandemic-fueled demand for tech products would play out.
Benioff began a memo to the employees of Salesforce last week by invoking, as he so often does, the Hawaiian word for family. “As one ‘Ohana,” he wrote, “we have never been more mission-critical to our customers.” But the economic environment was “challenging,” Benioff wrote. “With this in mind, we’ve made the very difficult decision to reduce our workforce by about 10 percent, mostly over the coming weeks.”
“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,” Benioff went on to say. Like other tech leaders, however, it’s unclear if Benioff will face any repercussions to his title or compensation.
Patricia Campos-Medina, the executive director of the Worker Institute at Cornell University’s School of Industrial and Labor Relations, slammed this spate of mea culpas as “empty apologies” to the workers now paying for their miscalculations.
While there will be a lot of near-term uncertainty for these tech workers, as well “a big economic hit on their lives,” Campos-Medina added, “I do think that this is a very skilled workforce that will find a way to engage back in the economy.” She predicts many of the laid-off tech workers will likely be able to find jobs and “we will see more stability in the mid-to-long term.”
But the end may still not be in sight. Dan Ives, an analyst at Wedbush Securities said last week that the Salesforce and Amazon layoffs “add to the trend we expect to continue in 2023 as the tech sector adjusts to a softer demand environment.” The industry is now being forced to cut costs after “spending money like 1980’s Rock Stars to keep up with demand,” he added.
And despite the robust overall labor market, there are growing concerns that tech layoffs could spread elsewhere.
“I think we’re seeing an inflection point; the rate of jobs growth is slowing and a lot of these tech layoffs that we’re hearing about, I think are going to start materializing across the broader economy by the end of the first quarter,” John Leer, chief economist at Morning Consult told CNN’s Chief Business Correspondent Christine Romans in an interview Friday.
In that sense, at least, Silicon Valley may once again be ahead of the curve, but not in the way it wants.
Billionaire Salesforce CEO Marc Benioff often conjures the Hawaiian concept of “Ohana” with regards to his company culture. It conveys the idea of family bonds that encourage people to be responsible for each other.
After an all-hands call at Salesforce on Thursday in which Benioff reportedly dodged questions about recently announced layoffs in a rambling, two-hour speech, the appropriateness of that concept came into question.
A day earlier, the software giant said it would cut about 10% of its workforce, noting customers were “taking a more measured approach to their purchasing decision” in a “challenging” environment.
In an email to staff about the thousands of layoffs on Wednesday, Benioff again evoked “Ohana” and the idea of family bonds:
“The employees being affected aren’t just colleagues,” he wrote. “They’re friends. They’re family. Please reach out to them. Offer the compassion and love they and their families deserve and need now more than ever. And most of all, please lean on your leadership, including me, as we work through this difficult time together.”
‘Avoiding the topic at hand’
But judging by reactions to his speech and the unanswered questions, employees were not feeling the “Ohana.” On an internal Slack channel intended for questions during the meeting, according to Insider, one employee asked:
“Given how little of this call has addressed the layoffs, the questions asked in this channel, and the ‘family’ who were laid off, should we consider retiring the phrase ‘Ohana?’”
Other posts in the Slack channel reportedly included, “Is Marc filibustering 47,600+ employees right now by talking in circles and avoiding the topic at hand?” and “I’m sure many of the 10s of thousands of people on this call could be getting things done rather than listening to an unstructured conversation about the business when most people came with very specific questions they hoped would be addressed.”
Benioff did seem to briefly refer to the layoffs in his speech, but in a way that likened them to deaths, according to Insider:
“At the kickoff every year, you know, we, um, have a moment where we always say goodbye to everyone who’s died during the year,” he said. “And, um, loss is really difficult, and losing folks, and especially losing our trusted colleagues and our managers or employees, it’s very similar, uh, in a lot of ways for me. We need to kind of acknowledge that and give ourselves time to mourn and kind of be able to move forward.”
A company blog post from 2017 entitled “The Real Meaning Behind ‘Salesforce Community’” states: “In Hawaiian culture, Ohana represents the idea that families—blood-related, adopted, or intentional—are bound together, and that family members are responsible for one another. When [Beniofff] created Salesforce in 1999, he made sure that ‘Ohana’ was in the company’s foundations.”
Salesforce did not immediately respond to Fortune’s request for comments.
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Salesforce is laying off about 10% of its workforce in the latest round of job cuts in the tech industry as corporations cut back on software and other spending.
The San Francisco cloud computing software company will also be closing some offices, according to a regulatory filing Wednesday.
“The environment remains challenging and our customers are taking a more measured approach to their purchasing decisions,” said CEO Marc Benioff in a letter to employees. “With this in mind, we’ve made the very difficult decision to reduce our workforce by about 10%, mostly over the coming weeks.”
Benioff, who co-founded Salesforce in 1999, recently became the sole CEO after Bret Taylor resigned as co-CEO and vice chairman in November.
Benioff said employees being released will receive nearly five months of pay, health insurance, career resources, and other benefits.
“This is a smart poker move by Benioff to preserve margins in an uncertain backdrop as the company clearly overbuilt out its organization over the past few years along with the rest of the tech sector with a slowdown now on the horizon,” Wedbush analyst Dan Ives wrote in a client note.
Salesforce employs nearly 80,000 people.
The company anticipates $1.4 billion to $2.1 billion in charges related to its plan. That includes $1 billion to $1.4 billion in charges tied to employee transition, severance payments, employee benefits, and stock-based compensation. There will be $450 million to $650 million in charges for office closings. Approximately $800 million to $1 billion in charges are expected to occur in its fiscal fourth quarter.
Tech companies hired aggressively during the pandemic to keep up with soaring demand, but Salesforce had been growing rapidly since at least 2018. Its workforce more than doubled between then and 2021. In July of that year, it completed the $27.7 billion acquisition of Slack.
Employee restructuring efforts are expected to be mostly complete by the end of Salesforce’s fiscal 2024. Actions related to its office closings are anticipated to be fully complete in fiscal 2026.
Shares of Salesforce Inc. rose more than 2% in morning trading.
Salesforce is laying off about 10% of its workforce in the latest round of job cuts in the tech industry as corporations cut back on software and other spending.
The San Francisco cloud computing software company will also be closing some offices, according to a regulatory filing Wednesday.
“The environment remains challenging and our customers are taking a more measured approach to their purchasing decisions,” said CEO Marc Benioff in a letter to employees. “With this in mind, we’ve made the very difficult decision to reduce our workforce by about 10%, mostly over the coming weeks.”
Benioff, who co-founded Salesforce in 1999, recently became the sole CEO after Bret Taylor resigned as co-CEO and vice chairman in November.
Benioff said employees being released will receive nearly five months of pay, health insurance, career resources, and other benefits.
“This is a smart poker move by Benioff to preserve margins in an uncertain backdrop as the company clearly overbuilt out its organization over the past few years along with the rest of the tech sector with a slowdown now on the horizon,” Wedbush analyst Dan Ives wrote in a client note.
Salesforce employs nearly 80,000 people.
The company anticipates $1.4 billion to $2.1 billion in charges related to its plan. That includes $1 billion to $1.4 billion in charges tied to employee transition, severance payments, employee benefits, and stock-based compensation. There will be $450 million to $650 million in charges for office closings. Approximately $800 million to $1 billion in charges are expected to occur in its fiscal fourth quarter.
Tech companies hired aggressively during the pandemic to keep up with soaring demand, but Salesforce had been growing rapidly since at least 2018. Its workforce more than doubled between then and 2021.
Employee restructuring efforts are expected to be mostly complete by the end of Salesforce’s fiscal 2024. Actions related to its office closings are anticipated to be fully complete in fiscal 2026.
Shares of Salesforce Inc. rose more than 2% in morning trading.
Salesforce is laying off about 10% of its workforce, more than 7,350 employees, in the latest round of job cuts in the tech industry as corporations cut back on software and other spending.
The San Francisco cloud computing software company will also be closing some offices, according to a regulatory filing Wednesday.
“The environment remains challenging and our customers are taking a more measured approach to their purchasing decisions,” said CEO Marc Benioff in a letter to employees. “With this in mind, we’ve made the very difficult decision to reduce our workforce by about 10 percent, mostly over the coming weeks.”
Benioff said employees being released will receive nearly five months of pay, health insurance, career resources and other benefits.
Salesforce employs about 73,500 people.
“Smart poker move”
“CRM clearly is seeing headwinds in the field and thus is trying to quickly adjust to a softening demand environment,” Wedbush analyst Dan Ives said in a report. “This is a smart poker move by Benioff to preserve margins in an uncertain backdrop as the company clearly overbuilt out its organization over the past few years along with the rest of the tech sector with a slowdown now on the horizon.”
The company anticipates $1.4 billion to $2.1 billion in charges related to its plan. That includes $1 billion to $1.4 billion in charges tied to employee transition, severance payments, employee benefits, and stock-based compensation. There will be $450 million to $650 million in charges for office closings. Approximately $800 million to $1 billion in charges are expected to occur in its fiscal fourth quarter.
Tech companies hired aggressively during the pandemic to keep up with soaring demand, but Salesforce had been growing rapidly since at least 2018. Its workforce more than doubled between then and 2021.
Employee restructuring efforts are expected to be mostly complete by the end of Salesforce’s fiscal 2024. Actions related to its office closings are anticipated to be fully complete in fiscal 2026.
Shares of Salesforce rose more than 3% before the opening bell.
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