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Tableau Tumbles On Microsoft Rivalry; Software Stocks Down Hard

Tableau Software ( DATA ) stock lost nearly half its value Friday, as investors reacted to weak first-quarter guidance late Thursday and the rise of Microsoft — and possibly Amazon.com — as a top rival in analytics, while enterprise software spending overall seems to be easing. Microsoft ‘s ( MSFT ) new PowerBI data-analytics software product, irresistibly priced for free against Tableau’s premium-priced product, won’t necessarily affect only Tableau’s campaign. Rival Workday ( WDAY ) stock was down 14% and Salesforce.com ( CRM ) was down 12% in midday trade in the stock market today . Security software stalwart  Palo Alto Networks ( PANW ) stock was down 11%. Tableau stock, though, was down 49% as its outlook for this quarter and the full year lagged far below Wall Street expectations. Wall Street analysts, who were mostly upbeat about Tableau a day earlier, raced to downgrade ratings or reduce price targets. “Tableau reported revenue that beat consensus by only 1% (lowest ever), or about $2 million, when the average beat over last 11 quarters is around $11 million,” Summit Research analyst Srini Nandury said in a research note. Summit slashed its price target on Tableau stock to 45 from 80, and maintained a hold rating. “Given that the company pulled down guidance for 2016, we believe Tableau is in the penalty box for the foreseeable future,” Nadury said. “We remain on the sidelines given our belief that 1) comps will get tougher from these levels; 2) competition continues to materialize” with Qlik Technologies ( QLIK ), MicroStrategy ( MSTR ), Salesforce.com, Amazon.com ( AMZN ) and Microsoft “all gunning for a piece of the action; 3) the market may not be as big as some on the Street believe as most Excel users (as Tableau targets) would never need a visualization function; and, 4) low-hanging fruit already has been picked.” Tableau said it added more than 1,000 employees, many of them in sales, in 2015 and now has a total workforce of 3,000-plus. But Kelly Wright, executive vice president of sales, is leaving by year’s end. Responding to an analysts’ question, on the company’s earnings conference call, about her departure amid the sales force buildup, management downplayed the transition. When her retirement was announced in January, CEO Christian Chabot said, “Kelly has provided the sales leadership we needed and built a world-class sales team.” She was Tableau’s first salesperson in 2005. Business-intelligence software maker Splunk ( SPLK ) was down 25% midday Friday, while Qlik was down 15. Microsoft stock was down 2%.      

Redbox Faces Hit From Accelerating Shift To Streaming Video

Automated retail kiosk operator Outerwall ( OUTR ) late Thursday beat lowered expectations for the December quarter. But shares of the Bellevue, Wash.-based company fell Friday as the firm’s guidance pointed to a rough year ahead for its Redbox DVD rental business. Outerwall stock was down 15% in midday trading, below 28, on the stock market today . It had fallen as much as 24% earning and is at its lowest level in six years. Piper Jaffray analyst Michael Olson on Friday threw in the towel on Outerwall stock, lowering his rating to neutral from overweight and slashing his price target on the stock to 32 from 57. “Redbox faces secular headwinds, and while we do not expect a ‘fall off a cliff’ scenario, we believe the trend is accelerating and will continue to drive year-over-year revenue and EPS decline,” Olson said in a report. Redbox competes with streaming video services like Amazon.com ( AMZN ), Hulu and Netflix ( NFLX ). Olson is modeling for a 26% year-over-year decline in rentals per Redbox kiosk in the first quarter and a 17% decline for all of 2016. Outerwall reported Q4 EPS of $1.43 on sales of $527.2 million, ahead of previously lowered guidance and above the Street view of 64 cents on $512.3 million. But the company’s outlook for 2016 is materially below consensus. Outerwall anticipates 2016 EPS of $5 to $6.30 vs. the Street’s estimate of $7.14. Outerwall CEO Erik Prusch remained upbeat about Redbox, which provided 77% of revenue in Q4, despite acknowledging ongoing secular declines in the market. “Redbox is a compelling business, providing new movie releases to millions of loyal consumers at a great value,” he said in a statement . “We will manage the business for profitability and cash flow, and we will continue our focus on expense management, operational efficiencies and network optimization.” Prusch said he sees a long life for the DVD rental business. “We are confident that millions of consumers will continue renting from Redbox for many years to come, as a majority of our customers use Redbox to complement digital alternatives,” Prusch said. Outerwall also operates Coinstar coin-redemption kiosks and ecoATM used-electronics-purchasing kiosks. Redbox generated 135.8 million rentals in the fourth quarter, down 24% from the same quarter a year earlier. In 2016, Outerwall expects to reduce its number of Redbox kiosks by 1,000-2,000. It ended 2015 with 40,480 Redbox kiosks, compared with 42,280 at the end of 2014. Dougherty analyst Steven Frankel reiterated his neutral rating on Outerwall in a report Thursday. “While share repurchases and other forms of financial engineering are helping the EPS line, the secular decline in DVD demand and execution issues at Redbox are creating significant challenges,” Frankel said. “Until we see signs of stability at Redbox, we view Outerwall as the classic value trap.” However, Wedbush analyst Michael Pachter believes Outerwall can wring more profit out of its operations. In a note Thursday, he maintained his outperform rating on the stock but cut his price target to 40 from 59.

How Much Does Joe Make? That’s No Secret At Some Companies

For 30 years, Whole Foods Market ( WMT ) has operated with a transparent salary policy. Any employee can find out the pay of every one of the company’s 91,000 workers, from the most junior grocery baggers to co-CEOs John Mackey and Walter Robb. The company even has a salary cap. No one — not even Mackey or Robb — can be paid more than 19 times the average hourly pay of all Whole Foods employees. That, not surprisingly, has changed the way employer and employees negotiate. “It’s a great check and balance for us,” says Mark Ehrnstein, global vice president of team member services.  “Team members often have questions about what someone else earns. Our open pay policy gives them clean line of sight into that.” Ehrnstein says that many employees take advantage by making an appointment with the HR department, during which they can view the so-called “wage disclosure report” and take all the notes that they want to incorporate into their own salary negotiations. (Printing the report is not allowed.) The impact of the policy is hard to quantify, but plenty of evidence suggests that it’s worked in the company’s favor. Ehrnstein says that Whole Foods’ employee turnover rates are much lower than its competitors’, and the company has been on Fortune Magazine’s list of the 100 best places to work for 18 years running. And yet, despite the example that Whole Foods’ policy has set, Ehrnstein says that the companies following in its footsteps are “few and far between.” That may be changing, however, and it shouldn’t come as any surprise that a new wave of pay-transparency trailblazers is rising from Silicon Valley, land of innovation. Startup Buffer Posts Its Salaries Social media management startup Buffer has taken Whole Foods’ model a step further by making its salaries truly public: Every employee’s salary is published on the company’s website (under the “transparency” button on site’s home page).  And while transparency has become a big part of the five-year-old company’s identity, that wasn’t the plan. The whole thing started because Buffer’s founders wanted to share their progress with the world. “We started tweeting, ‘Today we are making $100/month,’ ” says co-founder Leo Widrich, who serves as chief operations officer. “It didn’t strike anyone as transparent. We were just sharing what we’re doing.” But as the numbers got bigger, eventually hitting $1 million a month, people started noticing — and asking why they kept doing it. “We asked ourselves the question: ‘Why should we stop now?’ ” recalls Widrich. The founding team decided to expand on the transparency theme. After getting some mild pushback from employees, it developed a clear (and transparent) formula for determining pay. Then it published a blog post about the new policy … and received some 4,000 new job applications by the next month. Fast forward to today, and the 70-employee Buffer continues to get about 2,000 applications each month. Widrich credits the company’s transparent approach for its success on all fronts. “I believe this has given us an incredible and unexpected boost,” he says. “Customers come to us and say, ‘I chose Buffer as my social media service because I like the way you do things.’ ” Widrich says that transparency is a particularly good fit for young technology companies, which are more prone to pushing the envelope. “This is really deeply rooted in Silicon Valley’s approach to not accepting everything at face value,” he says. “People here generally like to approach things with fresh eyes.” Jet Takes On Amazon With ‘Innovators’ Eyes don’t get much fresher than those at Jet.com, a one-year-old e-commerce startup that aims to challenge Amazon.com ( AMZN ) and has established transparency as one of its core values. Jet’s approach has been to offer employees salary and equity packages dictated by experience and performance levels. Tying equity to experience and performance has proved to be a defining strategy in building a staff committed to the company’s long-term success. “The kind of people who are drawn to Jet are innovators and risk-takers,” says Deena Gianoncelli, executive vice president and chief people officer. “When you’re an owner, you’re not thinking about how much you can get on a short-term basis.” The company doesn’t give raises, per se; if an employee wants to make more, he or she must earn a promotion to the next level. The approach has removed contentiousness from salary negotiations and engendered a more collaborative environment, says the company. Gianoncelli says that more mature companies should consider transparency as well. “I would definitely encourage other companies to really look at what their compensation structure and philosophy is and how it’s driving the collective efforts,” she says. “Companies that are more established would have more work to do in making such a transition, but there are ways.” SumAll Targets ‘Evil’ It all starts, according to Dane Atkinson, CEO of social media analytics startup SumAll, with wanting to drive out the “evil” that he had grown to realize was layered over the way compensation was handled historically. He hoped to take a bite out of that evil when he adopted SumAll’s transparent salary policy upon founding the company in 2011. “We didn’t form this policy to destroy evil,” Atkinson said. “But we realized how insidious the world of compensation was. It’s only in darkness that this kind of stuff can prevail.” Lifting that darkness from SumAll’s salary negotiations — the company basically encourages employees to compare their value to that of other employees — has changed the tone of those conversations, Atkinson says. “It allows us to talk very quickly and honestly about the truth of the matter,” he says. He says that the resulting trust between SumAll and its staff has helped the company keep its employee churn rate at about 10%, generally considered quite low for tech startups. Atkinson agrees with Jet’s Gianoncelli that while more mature companies will face additional challenges in adopting transparent salary policies, it’s in their best interest to consider doing so. And given the number of inquiries that he’s been getting from large HR organizations interested in the bones of a transparency policy, more might be getting ready to test the waters, emboldened by the success of a few brave tech startups. “Openness is always preferable to secrecy,” Atkinson said. “Going from secret to open is daunting, but I think it’s an extremely productive thing for a company to do.”