Jim Cramer's Mad Money, In-Depth 3/7/08: Annaly Retentive

Stocks discussed in the in-depth session of Jim Cramer’s Mad Money TV program, Friday March 7. Click on a stock ticker for more analysis.

Annaly Capital Management (NLY)

Cramer admitted he made a mistake recommending NLY which he initially thought was an exception to the rule of “If a company needs to borrow money from a bank or a broker, its stock needs to be sold.” Far from being an exception, NLY dropped 27% . Cramer thought NLY was a safe buy because it invests in only safer bonds with federal backing from companies like FNM. However, FNM and its peers currently have troubles of their own and the moral of the NLY mishap is “Never let conviction trump discipline,” Cramer said.

CEO Interview: Marc Benioff (CRM)

Although Cramer played it safe rather than sorry with CRM, trusting a downgrade by Goldman rather than upgrade by UBS, the company reported the best upside surprise of 2008 so far and may well be the last momentum stock left standing. Benioff said the company’s web-based subscription model sets it apart from competitors, and its $1 billion in deferred revenue is money in the bank. The company now provides services for top financial names such as Citi and AIG and expects to benefit from the financial sector’s need to produce more revenue growth.

Speculation Friday: Blockbuster (BBI)

Cramer was bullish on BBI until it grew 48%, and it has been a while since he has recommended the stock. He notes the company soundly beat its estimates, but was taken down anyway. There is a measure of risk in BBI concerning whether or not the company can meet the terms of its $250 million loan requirements; while BBI’s management expects to meet these commitments, the stock will be savaged if BBI fails to pay its creditors. Cramer sees an upside in BBI thanks to its CEO James Keyes, formerly of 7-11. He aims to cut costs, raise rental prices and encourage customers to buy rather than just rent movies. A major competitor, Movie Gallery, is currently filing bankruptcy, and BBI should grab more market share. Cramer said since the time for video on demand in the home has not yet come, BBI can still play for time.

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