Analysts are pleased with Salesforce.com, Inc.'s CRM new co-CEO structure that keeps Keith Block in a key leadership role alongside long-time CEO Marc Benioff.
The change was announced earlier month, and this was the first earnings call for Keith Block as co-CEO.
"Keith is an extremely seasoned veteran in software," Rob Breza, managing director and senior research analyst at Northland Capital Markets told Real Money in an interview. "If you're Marc, you need to keep Keith happy because you really don't want to lose him."
His analysis of the situation echoed that of Deutsche Bank AG (DB) managing director of software research Karl Keirstead, who said Block's leadership role is "an early signal of a role change at the top of the organization" and expressed positivity regarding Block's accession as he maintained a buy rating.
Breza explained that the co-CEO role is positive as it makes leadership of the massive company, which has rapidly grown to the largest player in the cloud marketplace, more manageable.
"You take a guy like Marc Benioff and tell him he has to manage all of those responsibilities with the company, at the size it is now, by himself?" he asked. "There's no way."
Breza explained that both men are vital as they play to their own strengths atop the cloud giant. He noted that Benioff will remain free to direct the company's strategic vision and acquisition targets while Block can focus on sales and marketing.
Additionally, he stated that the company's succession plan now becomes easier.
"Companies this size need to have a plan for succession" he emphasized. "They both kind of grew up at Oracle and Keith is older than Marc, so I don't think that's a threat, but this will help them formulate a plan together."
He concluded that the plan for the new structure is a positive as it ties Block to the company for the long term. Breza issued a buy rating on CRM stock and advised investors buy the weakness that the stock is showing today.
To be sure, co-CEO structures historically have not been the best way to retain an important executive.
Famous examples include the joint leadership of Travelers (TRV) and Citicorp (C) under Sandy Weill and John Reed, which led to Weill ousting Reed from his position, and Martha Stewart Living Omnimedia's (MSO) attempt at executive duality with Wenda Millard and Robin Marino that led to Millard quitting.
As Block and Benioff "grew up" together at Oracle, a company that now maintains its own precarious co-CEO arrangement, they will hope to avoid the fate of their forerunners in the dual CEO experiment.