Cramer's Mad Money - Are We Headed for Another Tech Bust? (3/11/10)

by: Miriam Metzinger

Stocks discussed on the in-depth session of Jim Cramer's Mad Money TV Program, Thursday March 11.

JDS Uniphase (JDSU), Cree (NASDAQ:CREE), F-5 Networks (NASDAQ:FFIV), Apple (NASDAQ:AAPL), Akamai (NASDAQ:AKAM), (NYSE:CRM), VMware (NYSE:VMW), Oracle (NYSE:ORCL)

Close to the tenth year anniversary of the bust, tech stocks are taking off. With JDS Uniphase (JDSU), Cree (CREE), F-5 Networks (FFIV) and Apple (AAPL) up triple digits and Akamai (AKAM) with a 92% increase, investors would be wise to hold off buying more of these stocks right now, given how much they have run, and Cramer would take profits. However, Cramer is a tech bull for the long-term and says tech's current rally is not like the speculation frenzy ten years ago, because higher stock prices are based on earnings rather than on hype. The drive toward faster internet, the mobile internet tsunami and cloud computing are hot trends that are only going to get hotter, and provide solid catalysts for tech's upward climb. Tech stocks Cramer would watch include (CRM), VMware (VMW) and Oracle (ORCL).

"Don’t be so skeptical that you write off very big, very real trends,” Cramer said, “that I still think, even from these levels, could make you a lot of money."

Mad Mail: Goldman Sachs (NYSE:GS), Harley Davidson (NYSE:HOG), Cohen & Steers Quality Income Realty Fund (NYSE:RQI), ON Semiconductor (ONNN)

Cramer explained to one viewer why Goldman Sachs (GS) put Harley Davidson (HOG) on its conviction sell list and yet bought shares aggressively in the fourth quarter; "The answer is, very separate divisions. The asset division is differently run from the research. They can often be in conflict. It is not dictated by the Goldman research. That’s separate portfolio managers. But that is a great question, and the optics are quite horrible.”

Cramer said the ETF Cohen & Steers Quality Income Realty Fund (RQI) is among the "best real estate investors in the world. You can't go wrong with them," especially with a 5.6% dividend. Finally, Cramer said those who sold off ON Semiconductor (ONNN) which dropped 5% on Thursday were "a bunch of cowboys."

Going Sober: Brown-Forman (NYSE:BF.B)

Cramer urged investors to sell Brown-Forman, producer of Jack Daniels, after it crunched numbers to make a failed quarter look like a success. While the company emphasized a 10% Underlying Operating Income increase and an 8% rise in EPS, it glossed over an earnings per share decline of 10% and a 2% drop in operating income. Its ten cent earnings beat was due to inventory shifting and currency translations, not on actual revenue increases.

The company's emphasis on its shipment increases without discussing its dramatic price declines covered over a significant loss for the company. Sales were weak, domestically and overseas, because consumers are looking for cheaper booze and are not so willing to pay up for premium liquor. The main red flag, said Cramer, was CEO Paul Varga's emphasis on the company's 10 year history rather than its recent quarter. When a CEO does that on a conference call, Cramer said, it's time to sell.

The company expressed its lack of confidence by setting guidance at only 4-7% compared to its 8% fiscal gain. Brown-Forman is currently up 10% and is close to its 52-week high and is in a perfect position for selling. Cramer called its $55 level "a terrific price to exit" a losing stock.

CEO Interview: Bob Bruggeworth RF Micro Devices (RFMD)

Thanks to the smartphone, many tech names are breaking out of historical cycles and are developing independent momentum. While the current season is not usually so great for tech, RF Micro Devices has pre-announced sales will be at least $240 million, a 41% increase over last year. The stock has been laggard so far this year, so Cramer was eager to talk to CEO Bob Bruggeworth, who said the company's 3G cellular business is up 80% since last year, thanks to the mobile internet tsunami, and its outstanding product portfolio is putting it ahead of the competition. RF Micro Devices also develops technologies that make broadband more efficient. Demand for its smart-grid technology is expected to double in 2010. Bruggeworth says the company continues to expand into China, Korea and other parts of Asia. Cramer thinks RFMD is going higher.


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