Don't Round Up the Next Redback

Why the heck did Ericsson (ERIC - commentary - Cramer's Take) have to buy the second-rate telco-equipment company that is Redback (RBAK - commentary - Cramer's Take)? For those of us who still remember Redback as one of the greatest shorts of all time in the 1999-2000 time frame, it's still a painful experience to see this stock rise up from the dead.

Worse, it is going to spawn a whole host of "next Redbacks," and you can see the usual suspects being trotted out, all ready for acquisition.

First, let's understand why Ericsson is even doing this: Cisco (CSCO - commentary - Cramer's Take) is eating everyone's lunch with the one-stop shop that it envisioned for cable and telco. The telco was always there to be had, but the cable, through the Scientific-Atlanta buy, has solidified Cisco's lead. Call it more of a hammerlock.

So, this is not an offensive move by Ericsson; it is a defensive one.

Second, let's look at the landscape. Today, you will hear that you need to buy Conexant (CNXT - commentary - Cramer's Take) because of this one. You will hear it because people are long this company and want out. Forget it. The balance sheet is too bad.

Then you will hear about JDSU (JDSU - commentary - Cramer's Take) as a turnaround. I have been over that quarter a gazillion times, and it wasn't that good because the business it bought to turn the company around -- test and measurement -- was very disappointing.

Next you will hear Ciena (CIEN - commentary - Cramer's Take). That I agree with. It had a good quarter, the first really good one in a while. But I say, "So what? Who needs it? Who is going to buy it?" You are buying it on earnings, and you just got that pop. I would own Ciena, but not buy it.

I will not condone Bookham (BKHM - commentary - Cramer's Take), Mindspeed (MSPD - commentary - Cramer's Take) or Finisar (FNSR - commentary - Cramer's Take), all too hard. I am also saying no to Avanex (AVNX - commentary - Cramer's Take) -- still going nowhere, and I think a case can be made for MRV Communications (MRVC - commentary - Cramer's Take), but I won't make it. Too risky.

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Jim 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. Watch Cramer on "Mad Money" weeknights on CNBC. Click here to order Cramer's latest book, "Mad Money: Watch TV, Get Rich," click here to order his book, "Real Money: Sane Investing in an Insane World," click here to get his second book, "You Got Screwed!" and click here to order Cramer's autobiography, "Confessions of a Street Addict." While he cannot provide personalized investment advice or recommendations, he invites you to send comments on his column by clicking here.

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