When asked about its client base, McLaughlin noted that no one vertical market represents more than 14% of Palo Alto's sales, which has kept it well-diversified and not reliant on government spending. He said corporate capital expenditures do tend to ebb and flow, but with security a top-of-mind issue at most companies, Palo Alto expects its growth to continue.
Finally, asked about the company's current litigation with
, McLaughlin said that while he cannot comment on the specifics of the case, he doesn't expect it to be a major factor for Palo Alto.
Executive Decision: Howard Schultz
In the "Executive Decision" segment, Cramer sat down with Howard Schultz, chairman, president and CEO of
, a stock that's up 21% since Cramer last spoke with Schultz in June. Starbucks is preparing to open its first Teavana tea bar in New York City tomorrow.
Schultz said Starbucks has actually been in the tea business since 1971, but with its acquisition of Teavana last year the $90 billion global market for tea is now right for innovation. He said the new Teavana locations will be a place to buy and sample teas and will bring all the romance and theater that Starbucks brought to coffee.
Schultz continued that Teavana is "not your mother's Lipton tea" as the shops will offer fine, exotic teas and the art of blending teas for that perfect cup. Schultz expects Teavana to become a new morning ritual for tea lovers, but unlike Starbucks, the chain will likely have fewer transactions with higher average ticket prices.
Also unlike Starbucks, which grew up as a U.S.-based franchise, Teavana will be global from the start and will feature international locations long before the U.S. market becomes saturated.
Schultz also went on the defensive, responding to allegations that Starbucks charges higher prices in countries like China. He said that while it's true the cost of a latte in China is more than in other markets, it's still comparable to others offering premium coffee in China. The cost reflects the investment Starbucks is making in its stores, people and supply chain as it gains a foothold in this new market.