Salesforce (CRM) stock rises on plans to cut 10% of workforce, seen as a positive first step

Salesforce (NYSE: CRM) today announced a restructuring plan that aims to cut operating costs and improve operating margins, according to an 8-K filing. The plan sees the company slashing approximately 10% of its workforce while also reducing office space in certain markets.

Salesforce was reported to employ more than 73,500 staff in 2022. CNBC reported earlier that the company cut fewer than 1,000 employees in November.

As a result of the new initiatives, Salesforce expects it will incur approximately $1.4 billion to $2.1 billion in charges, of which about $800 million to $1 billion is expected to be incurred in the fourth quarter of fiscal 2023.

“These charges consist primarily of $1.0 billion to $1.4 billion in charges related to employee transition, severance payments, employee benefits, and share-based compensation; and $450 million to $650 million in exit charges associated with the office space reductions,” the company added in a filing.

Salesforce expects to complete the restructuring by the end of the Company’s fiscal 2024.

Mizuho analyst Jordan Klein commented:

"Positive first step, BUT SHORT 8-K gives no update on revs, cRPO, op margins guide for current Jan Q4. Investors will still worry how weak core biz getting. But opens door to at least “own” small position on today’s actions," Klein said.

As of 08:17 EST (13:17 GMT), CRM stock is up about 4% in pre-market Wednesday.

By Senad Karaahmetovic

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