The Digital Disruption - Cramer's Mad Money (11/7/17)

by: SA Editor Michael Hopkins

Not just any digital strategy works - companies need the right digital strategy.

Let's take aim at Amazon (while Amazon takes aim at us).

Adobe democratizes with digital. Cramer visits with CEO Shantanu Narayen.

Cramer meets with CEOs from Royal Caribbean and New Relic.

More trouble ahead for restaurants? Cramer makes the case with Red Robin.

Stocks discussed on the in-depth session of Jim Cramer's Mad Money TV Program, Tuesday, November 7.

If you're going to compete, no matter what space you're in, you need a digital strategy.

Jim Cramer is hosting his Mad Money show from San Francisco this week. In Tuesday's installment, he shared four examples in which companies are growing their digital endeavors to disrupt well-established behemoths and their platforms (and, probably not surprising, the target is Amazon (NASDAQ:AMZN)).

The first - Adobe (NASDAQ:ADBE) and Microsoft (NASDAQ:MSFT). Both are collaborating to make their respective products the "preferred tool" for businesses.

The second - Google (NASDAQ:GOOG) (NASDAQ:GOOGL) and (NYSE:CRM). Both revealed plans to integrate Google's G Suite office software with Salesforce's core platform.

Both efforts are aimed at taking on Amazon and its large AWS cloud goliath.

The third - rumors of a 21st Century Fox (NASDAQ:FOX) and Disney (NYSE:DIS) deal, in which Disney is rumored to be interested in Fox's studio assets. The effort, if it comes to fruition, aims to challenge the giant in streaming media - Netflix (NASDAQ:NFLX).

The fourth involves Amazon again, but on the retail side. The online giant revealed its furniture push. And that news pushed shares down in traditional brick and mortar furniture retailers such as Restoration Hardware (NYSE:RH) and Williams-Sonoma (NYSE:WSM), along with online furniture company Wayfair (NYSE:W). Cramer's verdict? These companies are "dinosaurs" without a strong digital strategy.

Cramer's bottom line? It's not enough to have just a digital strategy. These companies need a good, effective digital strategy to compete in today's environment.

Adobe Democratizes With Digital

Cramer sat down with Adobe CEO Shantanu Narayen. Adobe recently released strong 2018 guidance, and continues to grow its various businesses. Longer term, Adobe said it expects its total addressable market to approach $83 billion by 2020.

As Cramer told viewers, Adobe's products allow small businesses to compete effectively with the big guys.

Adding to that point, Narayan said Adobe's imperative of empowering people to create ideas and help businesses transform "has never been more relevant."

Royal Caribbean Delivers

Despite worries that Royal Caribbean (NYSE:RCL) would be impacted by hurricanes in its namesake market, the company managed to deliver third quarter beats on both the top and bottom lines.

CEO Richard Fain, another visitor to Mad Money, said the Caribbean operations will come back, adding that "we're very proud of bringing back businesses to impacted areas." Overall, across all regions and businesses, bookings for 2018 are strong, he added.

As for 2017, the company's strong bookings were driven by demand in China, Europe and North America. Fain said going forward China will be a key market for Royal Caribbean.

No Stopping New Relic

New Relic (NYSE:NEWR) shares are up more than 80% year to date. The company continues to add big-name customers, such as 21st Century Fox, Carnival (NYSE:CCL) and Expedia (NASDAQ:EXPE).

Founder and CEO Lew Cirne said New Relic's enterprise efforts (outside of small business) now account for more than 50% of business. Not only are enterprise businesses renewing, they are growing with New Relic, he said.

"We're very excited about the journey. We got a lot of work ahead of us," Cirne said.

More Restaurant Woes

Not only did Red Robin (NASDAQ:RRGB) disappoint investors with its third quarter report (missing on both revenue and EPS estimates), the restaurant chain offered up news that didn't please Wall Street.

Red Robin said it plans to put on hold new store growth. The plan, according to Cramer's take, is to allow the company to find new approaches for growing the business.

Cramer lauded Red Robin for "speaking the truth." That said, the company announcement sent shares down 25%.

The real issues may be rising food costs and minimum wage growth. The other issue may be takeout. While some money is made with food taken out of the restaurant, restaurants make good money with alcohol sales, which only happen if a customer stays in the restaurant.

The punishing "stay at home thesis is real," Cramer said. "This is only just the beginning of a restaurant chain's worst nightmare."

Viewer Calls Taken By Cramer

Dynavax Technologies (NASDAQ:DVAX): Cramer suggested taking "some off the table" before any news from the biotech company.

Whiting Petroleum (NYSE:WLL): Cramer said he likes Apache (NYSE:APA) better.

Lumentum Holdings (NASDAQ:LITE): "What we do know is this is a highly volatile stock," Cramer said. "Not my cup of tea."


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