Cramer's Mad Money- Salesforce's Window of Opportunity Against Microsoft and Oracle (3/3/11)

by: Miriam Metzinger

Stocks discussed on the In-Depth session of Jim Cramer's Mad Money TV Program, Thursday March 3.

CEO Interview: David Jaffe, Ascena (NASDAQ:ASNA), with Wal-Mart (NYSE:WMT)

Dress Barn has changed its name, its focus and its image. In January, the company adopted the name Ascena (ASNA), and recently reported a terrific quarter with a 5 cent earnings beat and a 26.6% rise in revenues. The company raised guidance for 2011. Same-store sales for Dress Barn were only 1%, but Ascena's other stores, Maurice and Justice saw 17% and 11% same-store sales increases respectively. The stock is cheap and trades at a a multiple of 12.4 with a 13% growth rate. Ascena also is opening a store for boys called "Brothers" which will expand its reach in retail.

CEO David Jaffe discussed the name change and the new vision, as the company seizes opportunities to revamp underdeveloped stores and concepts like Maurice, which Jaffe described as a "diamond in the rough." Justice was another store that was having lackluster performance before Ascena bought it; now Justice is "all guns blazing." Cramer asked Jaffe about retail deals on the web, and Jaffe replied the company wants to explore new opportunities on the internet. Jaffe added the company is taking significant market share from Wal-Mart (WMT), and its sales from Maurice stores located next to Wal-Mart stores showed dramatic improvement while WMT's sales are declining. Cramer is bullish on the stock.

CEO Interview: Heinz (HNZ)

Heinz (HNZ) is an iconic American brand that is radically transforming itself into an emerging market play. A full 60% of its sales are from outside the U.S, and the Street welcomed news it was acquiring its equivalent company in Brazil Quero Alimentos. Cramer asked CEO Bill Johnson if he saw Heinz becoming a mainly international play, and Johnson replied that in 5 years, he expects 30% of the company's revenues to come from emerging-market countries.

Heinz is a brand that has been around for generations, but it always emphasizes engineering and innovation. Its new dip and squeeze packaging allows customers at fast-food restaurants to squeeze out the ketchup from one end or to open the other end for dipping. Johnson discussed the company's organic packaging innovation, which means "doing well by doing good." Heinz plastic containers will contain 30% renewable products and the 20% reduction of its footprint in the production of greenhouse gases is a great marketing tool that gives the company a competitive advantage of making consumers feel good about buying Heinz products. "It is one of those rare win-win situations," explained Johnson. Finally, Johnson says he is not worried about rising raw costs, since growth is compensating for higher commodity prices.

CEO Interview Marc Benioff, (NYSE:CRM) with Apple (NASDAQ:AAPL), Microsoft (NASDAQ:MSFT) and Oracle (NYSE:ORCL)

In spite of's strong quarter with its $0.05 earnings beat and 29% increase in revenues, the stock is down 4% on bearish skepticism concerning the company's ability to continue its aggressive growth. Salesforce will continue to "destroy software infrastructure" by allowing customers to cut their tech costs and pay less for software.

CEO Marc Benioff was in New York for the Cloudforce Conference, where he discussed the company's hiring new sales staff, a move that could dramatically increase the company's gross margins. However, the bears criticize the company's hiring practices, which Cramer sees as a valuable investment: "Perhaps Salesforce should have bought Treasuries instead," he quipped. Cramer discussed the company' s accelerated growth revenue, its 81% increase in cash flow from operations, and the 483% rise in its stock price since he got behind it in 2008. was the only tech company featured at the launch of Apple's (AAPL) iPad 2.

"We are in the post-PC world," declared Benioff. He noted that is the first cloud computing company to generate more than $2 billion in revenue, and he sees a window of opportunity to operate against Oracle (ORCL). "We will continue to grow and continue to take market share... I have a dream of creating a $10 billion revenue company, and I want to be up there with Oracle and Microsoft (MSFT). We can be better, we can be larger, we can be stronger."

5 Signs of Growth in the Market

"Growth is a lot like love. It conquers all," declared Cramer. On Thursday averages soared higher with the Dow up 190 points and it is clear that growth is the magic potion that might get buried under bearish chatter, but always emerges victorious. "With growth, you can overlook the negatives." Rising commodity prices can be overcome by a company that has accelerated revenue growth. Cramer pointed to five data points that signaled increased growth.

  1. The Weekly unemployment claims number was the best in 3 years. Even if Friday's monthly number isn't good, it won't negate this number.
  2. ISM for service industry numbers were terrific. This is significant given that two-thirds of American companies are in the service sector.
  3. The dollar fell. This is good for companies that have significant overseas exposure.
  4. Labor costs are falling. This will help counteract rising commodity costs.
  5. Oil prices fell. This reduces fear and means lower prices at the pump.


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