The Cloud Isn't Immune

Not too long ago, the cloud was supposed to be the most resilient part of the tech sector. Digital advertising was fading, e-commerce was slowing, and demand for consumer electronics was down. But businesses would continue to spend in the cloud because it was cheaper and more efficient than traditional software and on-premise computing equipment. 

But that story hasn't quite played out. Early this earnings season, we learned that cloud growth at the tech giants was slowing considerably. Now we know it's impacting the pure-play cloud companies too. And no one is more pure play than Salesforce, a pioneering player in cloud software that remade the way companies manage their sales relationships.

Last night, the company forecast lower-than-expected revenue for its current quarter ending January. Salesforece also said that its co-CEO Bret Taylor was stepping down. "After a lot of reflection, I've decided to return to my entrepreneurial roots," Taylor said in a statement.

At one point in time, Salesforce itself embodied entrepreneurial roots, having been founded by Marc Benioff, who left Oracle to start a more cloud-focused company in 1999. Today, Salesforce has quarterly revenue of nearly $8 billion. It's no longer a start-up -- and it's not immune to issues in the global economy.

"I'm seeing a lot of buying behavior that really reflects a lot of what we've seen during other crises, whether it's '08, '09 or even '01," Benioff told investors on the earnings call last night. 

"Starting in July of this year, the buying environment became more measured and foreign exchange headwinds were becoming increasingly complex," he added. "And we're not assuming that this economy gets any better anytime soon." 

The company now forecasts revenue growth of 8% to 10% in its January quarter. During the same quarter a year ago, sales grew 26%. The slowdown is here.  

Salesforce shares fell 8.3% today, making it the worst performer in the S&P 500.