Blockbuster Goes Bust - Cramer's Mad Money (6/23/08)

Stocks discussed in the in-depth session of Jim Cramer’s Mad Money TV program, Monday June 23.

Offshore Fears Unfounded

Cramer was critical of the fear of allowing offshore drilling because of “one oil spill” in 1969 (the Union off-shore oil spill off of Santa Barbara California); “We may not have the technology for clean coal, but we sure do have the technology for clean drilling, clean pumping and clean extraction of oil,” Cramer said. Offshore drilling is cleaner and safer than transporting oil on a tanker, Cramer added, and lifting restrictions will make around 18 billion barrels of oil and 76 trillion cubic feet of natural gas available. He said he is devoting the rest of the week to discussing clean offshore drilling companies.

Compagnie Generale de Geophysique-Veritas (CGV)

CGV is the only pure play on Seismic mapping for offshore drilling, and if Congress lifts restrictions, the company will see a significant upside. CGV’s 4-D technology controls 60% of the market, and the company is expecting more business from Brazil and in the Gulf of Mexico. CGV has a huge backlog and is “the cheapest stock left in the group.”

CEO Wall of Shame: James Keyes Blockbuster (BBI), Circuit City (CC)

Can one mistake turn a stellar CEO into an inductee onto Mad Money’s Wall of Shame? An unwise acquisition can make the difference between a transformational CEO to one who is wrecking the value of his company. As late as March, Cramer was bullish on Blockbuster, since CEO James Keyes was tackling debt, raising prices and transforming the company from a renter to a seller of movies. However, the stock is down 24% after the announcement that it plans to acquire Circuit City and pay a premium for a dying company; "These are two different companies in two different businesses," Cramer said. "There aren't any cost savings here." If Keyes were to scrap this meaningless acquisition, the stock would see a significant upside. However, he wouldn’t count on this, but would stay away.

Mad Mail: CSX (CSX), Tidewater (TDW)

Cramer told one viewer that if CSX’s CEO Michael Ward is forced out, the stock would see a short-term gain but would lose a third of its value in the long term, because the hedge funds which are trying to push Ward out “know nothing.” Of Tidewater, Cramer said although the company missed its quarter, “a rising tide lifts all boats.”

Seeking Alpha publishes a summary of Jim Cramer's stock picks every day including: Mad Money Recap, Lightning Round, Stop Trading and his Wall Street Confidential Picks.

Get Cramer's Picks by e-mail -- it's free and takes only a few seconds to sign up.

Seeking Alpha is not affiliated with Jim Cramer, CNBC or TheStreet.com

Comments

[Spectruman]

BBI - Shares are not down strictly from it's announcement. I'ts only from speculation. Blockbuster stores need an overhaul, CC stores are an attractive model and size, aside from most current Blockbuster stores the new floor models would be a good fit. With the real estate and assets CC currently possess I think it would be a profitable purchase for them. Yes they are different companies but the transformation would be a plus to consumers, only CC is falling but BBI has the only dominent retail front in it's field. Visual characteristics of a retailer makes a difference to me, and with or without CC, BBI stores seem to be improving steadily. BUY NOW.

[User 13449]

I Have been listening to Creamer for years, long before his TV show. Why does he change his advice from one week to another. He loved PBR in the middle of June, NOW he blows it off. Please tell us why!!!

[Chuck]

See the Oil Spills from Hurricane Katrina at skytruth.mediatools.or...

[Chuck]

Blockbuster Buy Now ?
Give me a break.
Brick and Mortar stores consuming expenses.
NetFlix erroding market share.
Comcast, etc eating into the rental of latest movies online.
Buy it at your own risk, and with money you don't currently need,
because in my humble opinion, it's going down.

[ThinkTank]

I don't understand why people are so overly thrilled with NetFlix. I prefer going into a store and getting the items right away. NetFlix is like any other on-line retailer such as Amazon, or NewEgg. No character and no customer interaction.

I'd buy Blockbuster, the though process of converging Media, whether it be MP3, HD , Games, ect could be endless. Great way to get back some market share from Best Buy too.

[whenmusicstops]

The convergence idea is nothing new....Remember Media Play? They were primarily in the midwest...

[byrd]

I bought BBI at $6 and change at Kramer's recommendation about a year ago. Now that it is really down, I could buy some more and average it out, but I don't trust that this speculative stock will ever manage to do anything. I would rather throw my money away on shopping.