Cloud computing giant Salesforce (NYSE:CRM) has become the latest — and first of 2023 — technology company to announce staff layoffs as it contends with a slowing economy and waning demand for its products and services.
San Francisco-based Salesforce, which is run by founder Mark Benioff, follows other major tech firms such as Meta Platforms (NASDAQ:META) and Amazon (NASDAQ:AMZN) in announcing headcount reductions. The layoffs come as CRM stock had plunged 46% in the last 12 months to currently trade at $134.78 per share.
Here are five things investors need to know about the layoffs taking place at Salesforce.
Five Things To Know About the Salesforce 2023 Layoffs:
1. Salesforce is laying off 10% of its employees and also plans to close some offices, though the exact locations of the office closures were not announced by the company. Salesforce had 73,541 employees worldwide a year ago.
2. The company expects the staff reductions to cost it between $1.4 billion and $2.1 billion in charges to cover expenses such as severance pay and continued healthcare coverage. About $1 billion of those charges are expected to be recorded in the fourth quarter of fiscal 2023.
3. Salesforce’s growth has slowed in each of the last four quarters, with the company posting its weakest revenue increase for the three months that ended Oct. 31.
4. Businesses that are dependent on cloud services are reducing their expenses through job cuts or delaying new projects, which has hurt Salesforce and other players in the cloud computing space.
5. Salesforce said that impacted employees in the U.S. will receive a minimum of five months’ pay, as well as a continuation of their health insurance and other benefits for a five-month period. Employees based outside the U.S. will receive a “similar level of support,” said the company.
What’s Next for CRM Stock
Salesforce’s stock is up 5% in premarket trading today on news of the layoffs, indicating that investors view the move favorably. However, the outlook for equities, and technology stocks in particular, remains uncertain. The technology-heavy Nasdaq index is down 34% over the last year, leading to declines in all major U.S. exchanges. As such, investors should remain cautious with CRM stock and consider waiting for the share price to bottom before buying.
On the date of publication, Joel Baglole did not have (either directly or indirectly) any positions in the securities mentioned in this article. The opinions expressed in this article are those of the writer, subject to the InvestorPlace.com Publishing Guidelines.