Salesforce.com Inc is expected to reveal slower top-line growth for the fifth consecutive quarter when it reports fourth-quarter results after the bell Wednesday, as pressure from activist investors mounts.
The cloud software company is forecast to post revenue of $7.99 billion, up 9.2%, year-over-year, and earnings of $1.37 per share, up 62% year-over-year. That would be good for full-year annual of $30.99 billion, a 19% rise, and EPS of $4.93, a 3.2% rise, both at the high end of the company’s guidance.
Salesforce is considered to be a bellwether stock for business spending, and its growth has slowed each of the past four quarters. The company has moved to prioritize profitability, taking steps including announcing an over 7,000-employee headcount cut in January.
This somewhat tenuous grip on controlling costs has drawn the frustration of activist investor Elliott Management. The group has nominated a new slate of directors, which is likely to include Elliott activist head Jesse Cohn.
Elliott Management was successful in pushing for previous changes at Salesforce including the addition of ValueAct Capital boss Mason Morfit, Mastercard chief financial officer Sachin Mehra and former Carnival Corporation (NYSE:CCL) CEO Arnold Donald to the company’s management team.
Despite the tumult, Wedbush analysts maintained an ‘Outperform’ rating and US$200 price target for the stock last week, writing that they have seen some improvement in large deal activity on core enterprise deals and that the cross-selling pipeline deal flow has expanded this quarter.
Salesforce shares traded 1.3% higher at $165.78 Wednesday morning in New York.
Contact Andrew Kessel at andrew.kessel@proactiveinvestors.com
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