Salesforce Spent $1.7 Billion on Buybacks. It Has Nothing to Show for It.
The stock market did not like the third-quarter earnings report from subscription software giant Salesforce (NYSE: CRM). The company beat analyst expectations, but guidance called for a growth slowdown in the fourth quarter. On top of that lackluster outlook, co-CEO Bret Taylor unexpectedly stepped down effective Jan. 31. The stock closed Thursday down about 8%.
More concerning than all of this, though, is the splashy $10 billion share buyback program Salesforce unveiled earlier this year. "...we're thrilled to initiate our first-ever share repurchase program to continue to deliver incredible value to our shareholders on our path to $50 billion in revenue in FY26," said co-CEO Marc Benioff in August.
The last thing Salesforce's share buyback program does is deliver value to its shareholders. Normally, share buybacks are a good thing, assuming the price paid for shares is reasonable. After the buyback, profits are spread across a smaller number of shares, boosting per-share numbers and potentially the stock price. In some cases, share buybacks are a better way to return value to shareholders than dividends.
Source Fool.com
