Cramer's Mad Money: Verizon's Ivan the Terrific (11/7/08)

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Includes: ADI, DUK, EMR, GOOG, HLF, INTC, IR, KMB, MDLZ, VZ, YHOO
by: Miriam Metzinger
Stocks discussed in the in-depth session of Jim Cramer’s Mad Money TV program, Friday November 7. 
 

Game Plan: Analog Devices (NYSE:ADI), Intel (NASDAQ:INTC), Kimberly-Clark (NYSE:KMB), Kraft (KFT), Duke Energy (NYSE:DUK), Emerson Electric (NYSE:EMR), Ingersoll Rand (NYSE:IR)

For his Game Plan segment, Cramer gave viewers his secret to picking stocks in a turbulent market. He searches the S&P500 for stocks which have fallen but have high dividends. Outstanding stocks include Analog Devices, Intel and Kraft, now that food prices have declined. While Kimberly-Clark is not so well run, it is fairly solid and has a 4% yield. Also yielding 4% are Ingersoll Rand, which is not as cyclical as it used to be and Emerson Electric, which has a variety of businesses. Cramer added to the list a Mad Money favorite, Duke Energy.

CEO Interview: Eric Schmidt, Google (NASDAQ:GOOG) with Yahoo (NASDAQ:YHOO)

Cramer spoke with Google chairman and CEO Eric Schmidt, an advisor on President-elect Barack Obama’s economic advisory board. He described the seriousness with which the President-elect and the board dealt with problems and his confidence in Obama’s ability to implement solutions quickly and effectively. Schmidt said wind, solar and geothermal energy were the best means to achieve independence from fossil fuels. A solution for both the employment problem and the energy crisis is to increase the production of hybrid plug-in cars and he suggested creating stimulus packages in future which are geared toward solving problems rather than writing checks without purpose.

Concerning the failed advertising deal between Google and Yahoo, Schmidt said the government was worried from an anti-trust angle, but he commented their objections “didn’t make any sense.” It is tough all over for advertising these days, and Schmidt says the mistake businesses make is to cut revenue-producing advertising budgets first. He is confident that advertising will increase once these companies realize these cut-backs don’t pay.

Invest in America: Verizon (NYSE:VZ) with CEO Ivan Seidenberg

Cramer has been consistently bullish on Verizon and has called it “one of the best and best-run companies” in the U.S. The company recently bought Alltel, which will add 11 million wireless subscribers, reported “one of the best quarters” of any company in the rough economy, and even with traffic rising to a billion text messages a day, the stock is down 30%. However, Verizon’s solid fundamentals and consistent cash flow have enabled it to propose a 7% hike. While FiOS, Verizon’s fiber optic cable, phone and internet service has attracted some criticism, Seidenberg says the program will revolutionize the TV experience in the next decade with the addition of 3-D and other technologies. He also envisions the development of multi-media text messages.

Seidenberg did not give any hints on whether Verizon will choose Microsoft or Google  in its quest for a search engine for its wireless phones; “We’re going to go [with the] one that produces the best long-term value over time,” said Seidenberg, adding the news will be out soon.

CEO Interview: Michael Johnson, Herbalife (NYSE:HLF)

Although Herbalife beat earnings estimates, the stock fell 24% after the company slashed guidance. However, since the company has reported double digit growth for 19 straight quarters and yields 4%. Johnson said the company guided down because of concern over the strong dollar and a 3% drop in sales in Mexico, a market which has been a “lightning rod” for the company. However, Johnson says Herbalife’s fundamentals are “incredibly strong and its dividends are safe.” Cramer predicts Herbalife will bounce back again.

Outrage of the Day: Tim Geithner as Treasury Secretary?

Cramer was outraged when he heard rumors that New York Federal Reserve ChairmanTim Geithner is on the short list for Obama’s Secretary of the Treasury. Geithner was responsible for regulating the banks during the current crisis and he made the decision to let Lehman Brothers fail, an event which cost the country billions of dollars; “The man should be facing a Senate investigation,” Cramer said, “not a Senate confirmation hearing.” Geithner would be a “total disaster” as Treasury Secretary, and Cramer says he prefers Ken Lay, Jeff Skilling or Bernie Ebbers.

 
 
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