What's Cramer Got Against Microsoft?

As watchers and fans of CNBC’s Jim Cramer, we often agree with his fundamental perspective, but we understand that he is more infotainment than financial advisor. But we have to wonder from a fundamental perspective what his rationale was on two specific calls. On Tuesday’s Mad Money, two different callers asked him for his take on Microsoft (MSFT) right now. His responses follow:

There isn’t almost anything that Microsoft can do to move. I’m not going to recommend Microsoft on this show other than the fact that it happens to be a stock and I think that all stocks are going up now because we’re in an uptrend…

Microsoft. I can’t get excited about I just think it’s kind of dead in the water. You know I could go up with the rest of the market. It’s just not exciting enough.

It seems that Cramer’s main complaint for Microsoft is that it is not sexy and likely doesn’t have a major catalyst to propel price appreciation. Again, we understand that he makes countless calls each week day, but from a fundamental perspective Microsoft looks pretty sexy. The company has zero debt, and more than $20 billion in cash on hand. That alone is enough to separate it from the pack, but there is more. For a mature business they are still growing revenue impressively at over 10% annually in the last 5 years. They may be losing market share to competitors Apple and Linux but growth in worldwide computing is more than enough to over come this. In fact, we like Microsoft’s fundamentals so much that we highlighted it in Microsoft: A Ben Graham Stock.

It seems to us, here at Ockham, that Cramer is yet another investor who overlooks Microsoft because there is not enough cachet. However, Microsoft has all the hallmarks of being Greatly Undervalued and will see nice appreciation over the next year or two. For information on all other stocks mentioned by Cramer, see the chart to the right.

Original post

Comments

[Bocaboym22:]

It about developers, developers, developers, developers and upside potential, upside potential, upside potential, upside potential . . .the company has BUCKETS of money . . . vista was a failure, the next operating better be a winner or it might be a new market needed for the giant. . . maybe cloud computing

Mar 18 12:22 PM

[Bleumangue:]

You misread Cramer and therefore watch him for things that probably come up via serendipity. The market, for Cramer, is like a casino and the various stocks are like different themed slot machines. He has a general idea of when some of them might be due to payoff. It's like watching the geezerettes in AC play the slots, you get a feel for when to take over a machine. It's all feeling based a bit on hunches fueled by general info about how much the slot has been played. It's gambling. ANYBODY who approaches the stock market with some sort of belief that it makes any other sense, is in my opinion, sadly misinformed and in for an amusement park like ride towads grief. Microsoft is NOT a slot machine - it's more of a pool game where no real money will be made, bur you can go home and tell everybody what a terrific shot you made here and there.

Mar 18 03:13 PM

[UnKle AL:]

Cramer is correct ! ! I bought 500 shares of MSFT over 5 years ago at $65/share. Since then it has split once at 2 for 1 so I now have 1000 shares which should be valued at a minimum of $32.each. Instead I have shares valued at $16-17 for a 50% loss. Also, what good is it for stockholders if the company makes lots of money but doesn't give a decent dividend. MSFT's story of no growth and a pittance dividend is typical of today's CEO's perspectives.
Mr. Balmer makes multi-millions for a salary, the company is sitting on billions in profits and the stock holders are stuck with a 50% long term loss. Like most CEO's Balmer acts like the company belongs to him and he can do as he pleases. " WRONG" all companies belong to the stockholders and there well being should be factored into all
company plans. Maybe it's time for Mr. Gates to remember that HE is also a stockholder and vote his shares with us peons. Congratulations Mr. Cramer for calling a spade a spade

Mar 18 03:55 PM

[Old Hand:]

Anyone, even a novice, looking at a PV cart for this company can see that Microsh*t has been a very bad investment over the past three years.

The wheels are coming off the company.

Without recurring revenue from operating system, this company would be in serious financial trouble.

Mar 18 05:30 PM

[RK:]

For once, I agree with Mr. Kramer; I don't think MSFT will outperform the S&P. The company is too big. It takes a lot to move this company. Except for Windows 7, there is not much in the product pipeline. Even assuming Windows 7 is better received than Vista, PC is commodity. The next 5 years belong to mobile devices and cloud computing. While we may buy a new Kindle or new smart phone, our current desktops and laptops work very well and will continue to do so for a long while.

Mar 18 06:24 PM

[mope940:]

Unke AL said it all. Balmer's fifedom!

Mar 18 08:24 PM

[DAVID FOX:]

I ALSO AGREE WITH HIM, BUT WHAT WOULD YOU SAY ABOUT
TKO


On Mar 18 06:24 PM RK wrote:

> For once, I agree with Mr. Kramer; I don't think MSFT will outperform
> the S&P. The company is too big. It takes a lot to move this
> company. Except for Windows 7, there is not much in the product pipeline.
> Even assuming Windows 7 is better received than Vista, PC is commodity.
> The next 5 years belong to mobile devices and cloud computing. While
> we may buy a new Kindle or new smart phone, our current desktops
> and laptops work very well and will continue to do so for a long
> while.

Mar 19 03:25 PM

[tinman:]

In the short run, the market is a voting machine; in the long run, the market is a weighing machine. While MSFT stock languishes, the company continues to gain weight.

Mar 20 08:39 PM