Salesforce Departures: Belt Tightening?

Does Salesforce's loss of three key executives signal typical job churn or essential cost cutting in the face of rough seas ahead?

Despite a positive third quarter and predictions of a rosy outlook for the fourth quarter as well as 2009, software as a service (SaaS) giant may be facing trouble, with the departure of three senior executives.

Company President and Chief Strategy Officer Steve Cakebread is one of the three, having left February 1, according to the company's Form 8-K filing. The other two are reported to be senior sales executives at (NYSE: CRM).

Salesforce's filing said he resigned for personal reasons, and the move does not involve any controversy or disagreement with the company.

"Steve did a remarkable job in his time here, putting the people and processes in place to build an outstanding company," Bruce Francis, Salesforce's vice president, corporate strategy, told by e-mail. "We wish him all the best in his future endeavors."

Cakebread, who was chief financial officer at from 2002 to 2006, had previously retired from the post, in 2006.

As for the other two departures, Barron's TechTrader Daily blog quoted securities analyst Patrick Walravens as saying they are the executive vice president of enterprise sales and the senior vice president of enterprise sales for the Americas.

The departures triggered rumors that Salesforce is trying to cut costs. "It is widely being speculated that the company is trying to cut costs as it is no longer confident of remaining sheltered amid the decline in corporate spending this year," said Aditi Samajpati of Zacks Investment Research on his blog.

"I think 2009 will be very difficult for Salesforce, and I expect them to have many layoffs for the next several quarters," Raju Vegesna, chief evangelist at Zoho, which competes with Salesforce in the customer relationship management (CRM) business, told

"It'll be interesting to see how their numbers will look this quarter and in the next quarter, which will be more important as enterprises tighten their budgets." Vegesna said three to four customers a day switch over from Salesforce to Zoho on average, because of pricing.

"We're about one fifth the price of Salesforce. Our CRM application is free for the first three months and costs $12 per user per month for the professional edition from the fourth user on, and they charge $65 per user per month for every user for their professional edition," Vegesna said. "Businesses are more likely to cut a $65 cost than a $12 cost."

Salesforce declined comment on reports that it was cutting down on expenditures.

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