Cramer's Mad Money - Obsolete Tech Companies Don't Die (8/23/12)

by: Miriam Metzinger

Stocks discussed on the in-depth session of Jim Cramer's Mad Money TV Program, Thursday August 23.

Obsolete Tech Companies Don't Die: Hewlett Packard (NYSE:HPQ), Dell (NASDAQ:DELL), IBM (NYSE:IBM)

After terrible quarters from Hewlett-Packard (HPQ) and Dell (DELL), it is becoming clearer that IBM (IBM) made the right decision to sell off its PC business and expand into outsourcing and software. IBM's stock has been performing well, but Dell and HPQ, while they tried to expand into new areas through acquisitions, are being dragged down by their obsolete technologies. To vary a quote from General Douglas MacArthur, Cramer said, "Obsolete tech companies don't die, they just fade away."

Toll Brothers (NYSE:TOL), Banco Santander (NYSE:SAN), Microsoft (NASDAQ:MSFT), Dell (DELL), Manchester United (NYSE:MANU)

Two shortages are defining this market, namely, the gold shortage and the home shortage, and the market doesn't know how to handle either one. The Dow fell 115 points on Thursday, but there was good news from Toll Brothers (TOL), which is seeing a jump in home values in every area, especially in regions of the country that were the hardest hit by the housing crisis. Gold is getting harder to find and to mine, and the supply constriction is one reason for the rally in the yellow metal, but gold may be rising because of the feeling that the European Central Bank is going to have to print more euros. While Banco Santander (SAN) dipped early on Thursday, it rebounded, and Cramer thinks this is the sign of optimism about a solution to the European crisis.

Cramer took some calls

Microsoft (MSFT) is not a stock to be overly enthusiastic about, even though it is inexpensive, because of bad results from Dell (DELL). Cramer might consider buying it at $30.

Manchester United (MANU) is a great team to watch, but not a good stock to buy.

CEO Interview: Marc Benioff, (NYSE:CRM). Other stock mentioned: Kimberly Clark (NYSE:KMB) (CRM) has been a battleground stock lately, although its bullish story has remained unchanged. CRM has superior management and solid numbers, including second quarter revenue growth of 37%, although the stock has barely risen over the past year. CRM's customers have reported an average of 47% growth in their revenue streams, and Kimberly Clark (KMB), on its conference call, cited CRM's technology specifically as a factor in its upside.

CEO Marc Benioff sees CRM's services as essential to businesses as companies seek to connect with their customers more closely through social networking. Operating cash flow is strong, and deferred revenue rose 43%, but The Street was preoccupied with the weak non-GAAP EPS number. CEO Marc Benioff said the company might be sacrificing a modest amount of profits short-term to make the needed acquisitions and innovations to occupy the number one position in the industry. Benioff discussed the upcoming DreamForce Conference on September 19.

CEO Interview: Irwin Simon, Hain Celestial (NASDAQ:HAIN). Other stock mentioned: Whole Foods (NASDAQ:WFM)

The secular growth in natural and organic food is an unstoppable trend, now that Hain Celestial (HAIN) products appear not only on the shelves of Whole Foods (WFM), but in the aisles of regular grocery stores in small towns. The company is acquiring U,K-based Premier Brands, and this acquisition should add 25 cents to Earnings Per Share in the near future. Hain reported a strong quarter, and the stock shot up 20%. The stock has seen a 280% gain since Cramer got behind it in 2010, and has risen 33% since Cramer last interviewed CEO Irwin Simon in May. Irwin Simon discussed the ways in which the company continues to make natural, non-genetically modified products a main priority and the growth of Hain's brands; 11 Hain brands are seeing double digit growth.

CEO Interview: Dan Hesse, Sprint-Nextel (NYSE:S). Other stock mentioned: Apple (NASDAQ:AAPL)

For a long time, Sprint-Nextel (S) occupied the number 3 position among wireless providers. In just a year, the stock has nearly doubled to over $4, and many investors are wondering if they missed the move. Cramer thinks the stock can go higher. Sprint is slowly making a comeback and is in the next phase of its turnaround. The first phase was focused on improving customer service; Sprint rates number one in this category, while it used to be in last place among its peers. Currently, Sprint is the only carrier that offers unlimited data on the iPhone, when at one time, it didn't even carry the iPhone. Investors were worried that Sprint overpaid to get the iPhone, but high volumes of sales are making the deal worthwhile. The rate of iPhone customers who are new to sprint is 40%, twice the rate of Sprint's competitors. Cramer doesn't think it is too late to buy Sprint.


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