Wednesday's Market Showed Reality - Cramer's Mad Money (2/3/16)

by: SA Editor Mohit Manghnani


Two drivers of salesforce growth - CEO Marc Benioff.

The PC is not dead - Intel CEO Brian Krzanich.

Fitbit CEO interview.

Stocks discussed on the in-depth session of Jim Cramer's Mad Money Program, Wednesday, February 3.

"Something really profound happened today. The stocks of the companies that were most on the ropes in the oil patch like Chesapeake Energy (NYSE:CHK) and Freeport-McMoRan (NYSE:FCX), led the rally and that's actually a major positive," said Cramer. The averages reversed losses when the oil prices spiked.

Oil has dragged down the market for some time since investors feel that demand for crude is declining. In Cramer's opinion, the demand is rising but due to the supply glut prices are going down. Investors feel that the debt-laden companies will go bust if the oil prices remain low, but the fact is that at $35-40, most might be able to pull off.

When the dollar becomes weaker, oil prices will rise as oil is sold in dollars. Finally, reality was seen in the markets as stocks of retailers and restaurants went up, since they benefit from lower gasoline prices. For some time, these groups went down along with the crude price, which is unusual behavior.

The selling in financials due to European banks continued, and many high growth stocks went down as investors moved into dividend-paying consumer packaged safe stocks like Kimberly-Clark (NYSE:KMB) and Clorox (NYSE:CLX).

CEO interview - (NYSE:CRM)

In the San Francisco week, Cramer interviewed Salesforce CEO Marc Benioff. The company had terrific earnings in November, but the stock has fallen 16% in this year. The company is the fastest enterprise software to reach $10B revenue.

Benioff spoke about their new product 'Lightning', which Accenture (NYSE:ACN) has started using internally. It works on desktops, tablets, phones and wearables and Accenture has given it to the first 25,000 users. Benioff is bullish on the innovative product and said that more users will come soon. "Lightning is the next generation of Salesforce's platform," he added.

He also commented on growth; "The key to growth, and the key to hitting these extraordinary numbers, and no one has grown as fast as we have in enterprise software, is two things: one is extraordinary customer success; and two is incredible innovation."

The company is on schedule for releasing its 50th major technology release. It has had 3 releases per year in the company's 17 year history. Benioff also rubbished reports of losing a major customer. He also added that no customer contributes to more than 0.5% of the company's revenue. They have a powerful revenue portfolio and have gone without missing a beat.

CEO interview - Intel (NASDAQ:INTC)

Intel's stock has had mixed performance lately and their stock trades at just 12 times earnings with 3.5% yield. The company reported a good last quarter but weaker than expected guidance. The company is tied to PCs for sure, but it is transitioning into other areas like data centers and Internet of Things. Cramer interviewed Intel CEO Brian Krzanich to find out what the future of PCs will be.

"We still are largely a PC company. PCs are still very important to our company. But if you look out at the end of this decade, the data center is going to continue to grow and grow. By the end of this decade, data centers should be just about the same size as the PC," said Krzanich.

He also said that 60% of the company's revenue is non-PC. By the end of the decade, Intel will be a two-cylinder company with PCs and data-centers. He also added the PC is not dead. Everyone uses a PC although the volumes may be declining. Thanks to innovation, Intel is getting more margins out of every PC. The recent acquisition of Altera (NASDAQ:ALTR) is expediting the transition process of Intel.

Cramer concluded that Intel is paying investors 3.5% yield to wait for the transition.

CEO interview - PayPal (NASDAQ:PYPL)

PayPal, the mobile payments company reported a great quarter last week and its stock soared higher in a difficult environment. The stock is a part of Cramer's charitable trust. Cramer interviewed CEO Daniel Schulman to hear more about the quarter.

Schulman mentioned that the company added 6.6M net new subscribers in the last quarter. He also said that it is the first time that more people shopped online than in a store. The revenue per subscriber is going up and that is how the company is taking share from competition.

There are a lot of payment companies coming up. The issue is that some work only online and not offline, some of them work with certain devices and some only in certain stores. All this makes the customer move to a brand they trust - that is PayPal. They have 180M users around the globe.

The company's $2B stock buyback shows confidence in the business. The company is also benefiting from Venmo which is a favorite for the millennial generation. It is seeing growth and expanding into new categories.

CEO interview - Fitbit (NYSE:FIT)

Fitbit's popularity of wearable devices is growing every day, but its stock has plunged big time. The company is a leader in wearable devices and Cramer interviewed chairman and CEO James Park to find out what's in store for the company.

Park spoke about their latest device, Fitbit Alta, that is an innovative device with an incorporated fashionable effect. "I like to call it our most fashionable device yet," he added. 70% of the Fortune 500 have deployed Fitbits to their employees and corporate welfare is a big part of the company.

He shared a case from a customer in the UK who discovered a heart condition after noticing elevated heart rate. Fitbit is not a medical device but tracks health data which is very important.

Park added that all the big investors are long-term holders of the stock.

Viewer calls taken by Cramer

J.C. Penney (NYSE:JCP): If you don't shop there, don't own the stock.

Disney (NYSE:DIS): There are hiccups in the short term but one should not bet against CEO Bob Iger.


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