salesforce.com, Inc. (NYSE:CRM) reported that it would dismiss about a thousand employees, just 2% of their personnel, just days after it impressed stockholders with an outstanding second quarter.
Laying 1,000 employees off just after posting record returns in the middle of a worldwide pandemic definitely sparks moral questions about the firm’s commercial practices. But the decision is not that shocking and it indicates the firm is exercising tight monetary discipline while extending to high growing remote work industries.
The firm’s administration did not discuss layoffs in their conference call. They confirmed the layoffs after some inside information was leaked to the Wall Street Journal.
Salesforce dropped a couple of clues
Salesforce locked its $15 billion coup of Tableau, a data visualization firm. This acquisition happened last August, and it is the biggest one ever for Salesforce.
The firm did not mention any layoff at the moment, but Tableau’s incorporation into their ‘Platform and Other’ venture probably uncovered some redundant spots. Salesforce was probably planning to cut off the unit at the beginning of the year, but the Coronavirus pandemic delayed the plans.
At the end of March, Marc Benioff, the CEO of Salesforce, tweeted that the firm will not perform any momentous layoffs over the coming 90 days. It will continue to pay their employees while the office places are closed. However, the CEO did not renew the promise in June.
During the previous quarter’s conference call, Mark Hawkins, the CFO of Salesforce, mentioned that the firm will be redirecting some funds to start its investments in all digital remote industries for the next 12-24 months. While any business that does not align with those priorities will not be emphasized.
The company did not explain the dealings that would be ‘de-emphasized.’ However, Geekwire says the layoffs impacted an “unidentified figure” of workers at Tableau, which hires 4,200 people worldwide when Salesforce took it over
Their guidance telegraphed the layoffs
Salesforce increased their non-GAAP operating margin guidance for the entire year from flat increase to a 75 basis point extension. Usually, an organization cannot raise their spending and extend their operating margin at one period. Unless it cuts off the weight and averts its income from other low-priority ventures.