Activist investor Starboard reveals stake in Salesforce

Yahoo Finance Live anchors discuss the boost in shares for Salesforce after an activist investor reveals stake in the company.

Video transcript

BRIAN SOZZI: Welcome back. Earnings season is in full swing. We, of course, had Goldman out with earnings pre-market. The market seems to like those. Also toymaker Hasbro and J&J. But let's start with Salesforce and what looks to be a new activist situation here brewing. Got a boost this morning after activist investor Starboard and Jeff Smith announced a stake in the firm. Jeff Smith said Starboard sees a significant opportunity in Salesforce. You're seeing Salesforce shares, which had been down about 40% year to date, perk up on this news.

Now, I messaged Jeff Smith. He did not return my request for comment. Salesforce just returning our request for comment moments ago, saying, quote, "We are committed to acting in the best interests of shareholders and are focused on continuing to execute on our strategy outline at Dreamforce." And that is the last time I talked to the Salesforce team at Dreamforce, Marc Benioff, co-CEO, Bret Taylor. And I think this is a team very focused on getting up the operating margins in this business.

Now, are they showing that operating margin improvement as fast as the market would like? I would argue no. But this is-- I think there is an increased sense of urgency, even before Smith came into the picture here at Salesforce to improve those margins and get them going in the right direction.

BRAD SMITH: Yeah, and those margins are going to come from that sales and marketing cloud. We know for marketing efforts, it's really going to be so data driven at this point. And yes--

BRIAN SOZZI: Right, not to interrupt you. Actually, Jeff Smith just sent me an email. And looks like-- it looks like they are involved in Salesforce, and they have a fairly large position. So that should be an interesting situation moving forward. Now, how this usually works, activists will meet with the management team and go from there, but definitely a situation worth monitoring.

BRAD SMITH: Noteworthy as well, some of the positions that Starboard has taken in the past-- Office Depot. You think about Semantic, Darden as well. And so over the year-- even Papa John's. And so with this and the decline in Salesforce or CRM shares since the highs of, what, $311 in late November, this is a ripe opportunity for them to be able to get in a mass-- a large enough position. And we'll see what kind of weight they try to throw around as well, even at the board level, if they look to take on seats there.

JULIE HYMAN: It looks like maybe not, right? At least the initial report here coming from David Faber over at CNBC says that Starboard is not going to push for management changes.

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Now, whether they're pushing for a seat on the board is a little bit different--

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--than management changes, but still, is this a sort of activist light position maybe on the part of Jeff Smith?

BRIAN SOZZI: But it's still a company in Salesforce-- and there, we have the opening bell on Wall Street and see Rubicon ringing that opening bell. But this is a Salesforce still growing sales and earnings, so it's maybe not a typical playbook that he ran when he was involved with Papa John's. But still, I'm sure they will have a meeting of the minds, so to speak.

JULIE HYMAN: Yes. And by the way, Jeff Smith at a conference also talking about liking a couple other names including Wix and Splunk, so seeing some lift for those as well.