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What do people want out of a CEO, a company and a stock? Let's take three top-of-mind examples: Salesforce.com CRM , Sprint S and Hain Celestial HAIN .
First, the easiest, Hain. People want to see an earnings beat that's big, a guidance raise that is huge, and signs that commodity pressure and gross margins are not an issue because the customer will pay up for the product. With the quarter announced yesterday you got all of that, especially with the acquisition of Premier Foods, which was accretive to the tune of an immediate $0.25 a share. When your company sells at 9x EBITDA and the acquired company sells at 5x EBITDA, it will happen.
Irwin Simon's Hain, like Whole Foods WFM , is riding perhaps the greatest secular investing trend of the next generation: health and wellness in order to fight the toxins that might otherwise give us cancer and other diseases. He is at the forefront. So is Whole Foods.
They go higher.
Next is Sprint. Dan Hesse is shocking people with what he is accomplishing, and when I asked him whether it was the product -- Apple AAPL -- the balance sheet or the service that is responsible for the turn, he said it was a little of all three, but the service stands out because he is recapturing old Nextel customers who would have otherwise been lost, at a rate that is about three times what it was eight months ago.
Sprint's future always hinged on the ability to keep the disastrous Nextel acquisition from wiping it out. If Hesse could do that, Sprint's unlimited plans and Apple phones would take care of the rest. It will take many years for this to play out, but I think the turn is in its infancy, and I like Dan's assurances to me that there are no "Mission Accomplished" signs flying at headquarters.
Of this troika, the most difficult to fathom is Salesforce.com. First, it has run in anticipation of a good quarter. Second, there is no doubt that CEO Marc Benioff is running the fastest-growing tech company of the era in terms of blowing through billion-dollar milestones. Third, his company is despised by a small group of analysts who believe that it is just a house of cards, despite outstanding operating cash flow, which is what I use to test the "real" numbers.
I read all sorts of lies about Salesforce.com -- that it's not really making any money, that it is just a Ponzi scheme, that its products don't work well, that the acquisitions are papering over weakness.
In reality, Benioff is just trying to accumulate all of the technology he can in an amazing land grab before everyone else gets it.
He's doing exactly what Oracle ORCL , Microsoft MSFT and SAP SAP did in a different era.
Throughout those trajectories, people sniffed and catcalled and shorted, and it didn't work out.
The fact that of all of the metrics, and I count 10 of them, the only one that was "disappointing" was a guide-down in the next quarter, despite a guide-up in the next year, tells me that the huge after-hours selloff was extreme.
So, three companies. One that is perfect, Hain, but is now expensive, one that is long-term positive, Sprint, with real profit-taking, and one that is so controversial as to be a total battleground, Salesforce.com.
If you can stomach a battleground -- hard for me -- Salesforce.com is right, and it was just kept down by endless short-selling last night. If you have patience, Sprint is going to continue to work, in my opinion.
And Hain? Let's just say let the market bring it down a little for you, because the company's execution sure won't. It was and is flawless.