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Salesforce.com To Cut 200 Jobs Despite Its Expectations To Make More Money 156

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

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  • by Logger (9214) on Friday August 30, 2013 @10:54AM (#44716611) Homepage

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

    • by gfxguy (98788)
      Agree... the most profitable companies in the world don't employ people just to keep them employed, the employ the workforce they need. Just because earnings go up doesn't mean they require the workforce they had.
      • by i kan reed (749298) on Friday August 30, 2013 @11:09AM (#44716763) Homepage Journal

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

        • It's more complex than that. Tax cuts are sweeping and wide across sectors and entire economies. They universally give all businesses affected the ability to modify operations more fluidly. Typically this means multiple businesses in a sector will have a greater strategic ability to out-compete their competitors, and so should probably do something about that.

          When a single business in a stable market has no specific pressures, it can choose to continue operating stable and slim down; or it can expand.

    • by turgid (580780) on Friday August 30, 2013 @11:37AM (#44717077) Journal

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

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

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

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

    • by Xest (935314)

      Especially the comment near the end about cutting jobs when they merged two companies.

      I mean what, is whoever wrote that piece of turd suggesting that if you merge two companies you should just retain two HR departments, two finance departments, or merge them and have one big bloated oversized mess?

      If anyone thinks you should keep all jobs when you merge two companies then they're kind of missing the point and wont get very far in life. Merging companies or even departments to cut redundancy is a standard w

    • Right. Sometimes a company cuts needed staff because the executives, or the shareholders pulling the executives' strings, are putting short term profitability over long term sustainable income. And sometimes a company cuts staff because the staff are redundant.

      And there's no simple rule of thumb for deciding which is the case for any given set of layoffs. I'm inclined to mistrust SalesForce.com's leadership because I'm one of those liberal hippie socialist types - but I prefer to see reasonable evide
  • Why is this news? (Score:4, Insightful)

    by poet (8021) on Friday August 30, 2013 @10:54AM (#44716619) Homepage

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

    • because if it's presented at news, then the anti-corporate knuckledraggers can spin their Wheel of Blame to point to the "story" as an example of [insert result from wheel of blame here].

      This week's spin seems to have landed on "greed".

    • by Mad Bad Rabbit (539142) on Friday August 30, 2013 @12:29PM (#44717633)

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

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

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

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

      • On a side note, Salesforce is hiring in Mexico. I am sure it is totaly unrelated.

  • by ugmoe (776194) on Friday August 30, 2013 @10:59AM (#44716667)
    Revenue is not the same as earnings Full Year FY14 Guidance: Revenue for the company's full fiscal year 2014 is projected to be in the range of $4.000 billion to $4.025 billion, an increase of 31% to 32% year-over-year. GAAP net loss per share is expected to be in the range of ($0.44) to ($0.42) while diluted non-GAAP EPS is expected to be in the range of $0.32 to $0.34. The non-GAAP estimate excludes the effects of stock-based compensation expense, expected to be approximately $511 million, amortization of purchased intangibles related to acquisitions, expected to be approximately $146 million, and net non-cash interest expense related to the convertible senior notes, expected to be approximately $47 million.
    • by alen (225700)

      sorry dude, used last mod point this morning

    • by Xaedalus (1192463) <Xaedalys.yahoo@com> on Friday August 30, 2013 @11:17AM (#44716843)
      They borrowed a hell of a lot of money, are trying to keep within their debt covenants, and need to make good on the compensation packages. Growth has been great for them, but my guess is that they've reached the limits of easy explosive growth and have now matured their market segment. While non-GAAP is all fine and good, GAAP is what the Street and investors look at. So if they're projecting to lose -$0.44 a share, then yeah, they're going to have to downsize in order to reduce expenses to the point where they eliminate that loss going forward.
    • And in plain English?

  • Aquisitions (Score:5, Insightful)

    by SpaceMonkies (2868125) on Friday August 30, 2013 @11:04AM (#44716719)
    Look at their aquisitions:

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

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

    Check out the new Slashdot iPad app [apple.com]
    • by Xaedalus (1192463)
      I suspect that they've reached maturity in their market, and are buying their innovation rather than developing it in house. I'm starting to wonder if Benioff and the Board have decided to run Salesforce as a cash cow. They invest little-to-nothing in internal R&D, purchase all the start-ups that are going in a direction that the market seems to favor, and keep workforce to an efficient minimum. It would make sense, especially if they've reached the limits of easy growth and now new revenue/customers ar
    • Exactly right. Specifically the ExactTarget acquisition has resulted in a shit ton of people becoming Salesforce, quite a few with positions that were already filled on the Salesforce side. Acquisitions are always bad for the same set of people: HR, accounting, and frontline support.

      That said, Salesforce has been struggling with one thing: getting the "market" to raise the stock price. SaaS companies feel traditionally undervalued, and are doing all kinds of weird gimmicks to boost the numbers that Wall Str

    • What do all these companies do? Either they have some customers that Salesforce wants, or they have a "technology" that they want. Where "technology" is just some code that has to be completely rewritten to work with the existing Salesforce code. This to me looks like a company out of control.

  • dead weight (Score:4, Insightful)

    by schematix (533634) on Friday August 30, 2013 @11:10AM (#44716767) Homepage
    It is quite normal that after a company has grown and hired more and more employees, that the time comes to get rid of those employees who didn't contribute the value that they are paid for. As uncomfortable as it is for someone to lose their job, most of the times it's not the productive people who are being let go - it's the dead weight. Truly good employees are hard to come by so if you happen to just be in the wrong place at the wrong time then it sucks, but you won't have a hard time finding a new job. Even in a less than stellar economy really good talent is always in strong demand. If you are incompetent, all bets are off and good luck to you.
  • Corporate Welfare (Score:4, Interesting)

    by Tridus (79566) on Friday August 30, 2013 @11:18AM (#44716863) Homepage

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

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

    • Re: (Score:2, Interesting)

      by Anonymous Coward

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

      I so dearly love when people (especially politicians) immediately make statements like that, implying that a company received a ton of money, without actually checking, you know, facts? If one bothers to read the news, it will become clear that _no money_ has been given at all. This is a grant based on various conditions, the essence of which appears to be that 300 long term jobs are created (and maintained) in New Brunswick over the next five years. It is actually still likely that those goals will be met,

    • This was covered in detail already the last time this happened. Payroll rebate programs have clauses to protect against this. They only get the money when they make their hiring numbers. They have not made those numbers so have not gotten a dime.

      These layoffs suck for the region and I have close friends who have been directly affected, but mis-reporting the situation with false truths helps no one.

  • I think I've finally deciphered the word: syn- means "together": -ergein is "to work". Therefore, "synergy" means "working people up en masse".
  • by mc6809e (214243) on Friday August 30, 2013 @12:24PM (#44717591)

    Revenue is not profit. It's entirely possible to increase revenue while losing increasing amounts of money.

    While I'm at it:

    Wealth is not income.

    "Literally" isn't for emphasis.

    Feel free to add to the list.

  • by asylumx (881307) on Friday August 30, 2013 @01:12PM (#44718081)
    I've said this before. Companies are not in business for the sole purpose of creating jobs. Creating jobs is a side effect of doing business. This business, as other commentators have pointed out, is eliminating unnecessary workforce because it will make them run more cleanly and ultimately end up with more profit. This should be indicative of what is likely to happen if you cut taxes for businesses -- they will add that money to their bottom line, but will continue only to hire new workers if they need to. That's why I don't buy it when politicians claim that corporate tax breaks will create jobs.

    I know I'm off topic, and I don't think Salesforce.com is doing anything wrong here. Just sick of people claiming tax breaks will fix the economy.
  • Just not in the U.S. They offered me a position last week.... in Mexico.

    But go on, wax poetic on free-market capitalism.

    • Just not in the U.S. They offered me a position last week.... in Mexico.

      But go on, wax poetic on free-market capitalism.

      Sorry for responding to my own post but I RTFA... This is a non-story. They cut redundancies after an acquisition. Happens all the time.

      And they're have at least 675 available positions.

  • If income is increasing, cutting jobs typically means a company is unable/unwilling to diversify or unable/unwilling to add value to current services.
  • Not only is this reduction in redundant staff probably appropriate, but this is one of the rare situations in which "synergy" is used in a non-lame, non-stupid way.

    When two companies merge, the hope is that the two joined as one company will be more effective than they were when they were working together, but separate companies. Synergy is a reasonable word to describe that.

    But unsurprisingly, that synergy does not always happen. You're combining two companies, with two different cultures, perhaps incomp

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