Zoom Video Communications Inc. slumped in early trading Friday after abruptly terminating the employment of President Greg Tomb, a former Google executive who had only started at the firm in June.
(Bloomberg) — Zoom Video Communications Inc. slumped in early trading Friday after abruptly terminating the employment of President Greg Tomb, a former Google executive who had only started at the firm in June.
Shares of the video-conferencing software company fell as much as 2% in premarket, putting them on track to extend their decline this week to more than 6%. Tomb will receive severance benefits in accordance with arrangements that are payable upon a “termination without cause,” the company said in a regulatory filing. The move is effective Friday.
Tomb had taken a high-profile role at Zoom during his short tenure, appearing on earnings calls and overseeing the company’s sales operation. He reported directly to Chief Executive Officer Eric Yuan, who started Zoom in 2011 and had to rapidly build up the business during a pandemic-fueled boom. More recently, the company has been cutting jobs to deal with softening demand.
A spokesperson for San Jose, California-based Zoom said the company isn’t looking to find a replacement at this time and declined to comment further.
The sudden move was taken as a negative by some on Wall Street. Citigroup Inc. analyst Tyler Radke wrote in a note to clients that it’s “hard to read this in a positive light,” as the sudden timing and limited language detailing the departure “gives investors plenty of leash to speculate on the reasons behind the departure.”
Separately, Sterling Auty, an analyst at MoffettNathanson, said that the departure came just days after Zoom’s most recent quarterly results, which beat expectations in terms of earnings, but showed the company continues to grapple with slower sales growth.
Zoom’s outlook implied “a bigger deceleration than the Street had modeled, and now we have a change being made in the executive that was brought in for sales leadership,” Auty wrote. He added that transitions in sales leadership roles typically take multiple quarters to play out.
Tomb’s employment included a $45 million stock grant that would vest over four years, in addition to a $400,000 base salary with an 8% bonus target, according to a June filing.
In an interview with Bloomberg during the January World Economic Forum in Davos, Switzerland, Tomb spoke optimistically about Zoom’s growth potential while acknowledging that the company faced more competition. A few weeks later Zoom announced it would cut 15% of its workforce.
–With assistance from Matt Turner, Cristin Flanagan and Lynn Doan.
(Adds premarket trading and analyst commentary.)
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