Telecom, Cable Could Fuel Next Move

Don't underestimate the consequences of what's happening in telecom and cable these last few days. We know that technology stocks in general are in the doghouse. I don't see much let-up for that, despite the Molex (MOLX - commentary - Cramer's Take) and Scientific-Atlanta (SFA - commentary - Cramer's Take) numbers last night. We need to see a really strong August and September to resurrect that group.

But think about some of the great things that could happen if the pressure on telecom and cable somehow ended. Verizon (VZ - commentary - Cramer's Take), SBC (SBC - commentary - Cramer's Take) and BellSouth (BLS - commentary - Cramer's Take) all are on an upswing that could lead to some very big moves in their stocks. Comcast (CMCSA - commentary - Cramer's Take) and Time Warner (TWX - commentary - Cramer's Take) this morning show you what happens after you have completed the buildout of cable: The cash flow is huge.

So don't think of the world as it is, think of it as it could be. Let's say Verizon's stock keeps going higher, something that could happen now that it is a growth vehicle again. (To deny that means you really do believe that AT&T (T - commentary - Cramer's Take) will keep its consumer customers despite its white-flag policy, which seems, to me, impossible.) Verizon then could offer a combination of stock and cash to Vodafone (VOD - commentary - Cramer's Take) to unwind its wireless deal. Vodafone could take that money and equity and go buy someone else, Sprint (FON - commentary - Cramer's Take), perhaps, or Deutsche Telekom's (DT - commentary - Cramer's Take) T-Mobile business. SBC could buy either EchoStar (DISH - commentary - Cramer's Take) rather than keep selling its products or a cable company or AT&T.

Worried about antitrust? I wouldn't be; remember, AT&T gave up competing in the consumer business and the enterprise business that is left would generate no Justice Department monopoly woes. Nextel (NXTL - commentary - Cramer's Take) and Alltel (AT - commentary - Cramer's Take) could be bought, too.

Then consider what can happen with equipment now that the parasites can't piggyback. The excess cash flow that the telcos generate actually can be used to build out competitive fiber offerings. Be careful here, I know I have jumped the gun playing the buildout and it has been costly. But it eventually will be right because of the growth these companies have. (Why have I been wrong? Because initially the mergers slow spending as the acquiring companies scramble to figure out what the heck they've got. I mean, consider that Andrew (ANDW - commentary - Cramer's Take) was the best stock out there until the AT&T Wireless (AWE - commentary - Cramer's Take)-Cingular deal. Also consider that Nortel's (NT - commentary - Cramer's Take) wireless business has been a casualty not just of its own accounting lying-cheating-stealing but of the freeze from the consolidation.)

---

At the time of publication, Cramer was long Comcast and Nortel.

James J. Cramer is a director and co-founder of TheStreet.com. He contributes daily market commentary for TheStreet.com's sites and serves as an adviser to the company's CEO. Outside contributing columnists for TheStreet.com and RealMoney.com, including Cramer, may, from time to time, write about stocks in which they have a position. In such cases, appropriate disclosure is made. To see his personal portfolio and find out what trades Cramer will make before he makes them, sign up for Action Alerts PLUS. While he cannot provide personalized investment advice or recommendations, he invites you to send comments on his column to [e-mail]. Listen to Cramer's RealMoney Radio show on your computer; just click here. Click here to buy Cramer's latest book, "You Got Screwed!" Click here to order Cramer's autobiography, "Confessions of a Street Addict."