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Cramer's 'Mad Money' Recap: Sharp Focus at Time Warner

TheStreet.com Staff

11/01/06 - 08:23 PM EST

Click here for an archive of Cramer's "Mad Money" recaps.

Because cable represents "the hottest of the hot," funds desperately want to be in Time Warner (TWX Quote - Cramer on TWX - Stock Picks), Jim Cramer told viewers of his "Mad Money" TV show Wednesday.

A lot of people had given up on Time Warner, said Cramer, and market players thought it was "caught up in too many agendas." But then CEO Dick Parsons surprised everyone when the company unloaded 18 of its magazines.

"The triple play [packaging digital cable, digital phone and broadband services together] in the Time Warner business is two thumbs up," Cramer said. "I realize that it is in a major turnaround, and Dick Parsons deserves the credit."

Time Warner's latest quarterly results were great, and the "show stealer" here was AOL, he said.

Cramer welcomed Parsons to his show, and in a satellite interview, congratulated him for his company's recent success.

"There are 87,000 of my colleagues that did it, and I just have the privilege of leading the company," Parsons said. "We hope to keep it up."

There are three things going on at the company, Parsons said.

First, regarding the turnaround and the perception of cable, Parsons said Time Warner probably has the best cable company in America. He believes the triple play is working, and the cable company is "poised to fly."

Second, the company's new strategy at its AOL unit is based on an advertising-based model, as opposed to a subscription-based model, and all of the initial indications signal to management that the change is working.

Finally, Time Warner has bought back 16% of the company in the past 10 months, Parsons said.

When Cramer asked if Carl Icahn, a major shareholder of Time Warner has helped shareholders, Parsons said, "Carl gets some of the credit."

Icahn, an activist shareholder, made Parsons "listen more deeply to the other shareholders," Parsons said. "They encouraged me to be more aggressive in terms of the stock buyback, which is helping us now."

In regard to the possibility of Time Warner spinning off its Time magazine business, Parsons said, "We never say 'never' to anything."

"Right now with Time, we are pruning and focusing on where the profitability is," the chief executive went on to say. "I believe in the magazine business."

While the company is in the publishing business, it is moving its content into the digital world, Parsons said. All of the company's "good content is finding its way onto the Internet."

"The current thinking is we want to manage our costs, make sure we have plans to move our big brands onto the Internet, but we're hanging on to this one," he went on to say.

In regard to AOL, Parsons said "it appeared to be a bold move to say we are going to give up billions of revenues in subscriptions, but we thought it through."

"I am very confident that Warner Brothers, which had a tough year on a comparison basis, is really positioned to have another gangbuster year," Parsons continued. In addition, New Line Cinema "has a few in the can that we are enthusiastic about," Parsons said.

Cramer believes this stock is where Comcast (CMCSA Quote - Cramer on CMCSA - Stock Picks) was when it was at $34 and people thought it was finished going higher.

"Buy Time Warner," Cramer said. "You will not regret it."

To view Cramer's interview with Dick Parsons, please click here.

Am I Diversified?

In the "Am I Diversified?" segment of the show, during which viewers call in to get Cramer's take on their portfolio holdings, the first caller offered the following five stocks:

Cramer called out a pair in Crocs and Under Armour because both companies are in the apparel sector. He also said that four of them -- Crocs, Under Armour, Sirius and Ford -- are speculative stocks. Plus, Cramer said he doesn't like Wal-Mart.

"Throw them all back," he said. "Maybe keep Crocs, but look at J.C. Penney (JCP Quote - Cramer on JCP - Stock Picks) and Sears (SHLD Quote - Cramer on SHLD - Stock Picks)," a stock Cramer owns for his Action Alerts PLUS charitable trust.

Instead of Ford, Cramer recommended looking at General Motors (GM Quote - Cramer on GM - Stock Picks), and instead of Sirius, he advised looking into a good entertainment company.

The second caller owned the following five stocks:

"This is why I come to play," said Cramer, who blessed the portfolio and commended the caller for having "completely done it right."

Cramer's third caller named the following five stocks:

Cramer blessed this portfolio as being diversified as well, but suggested a swap out of Duke Energy and into TXU (TXU Quote - Cramer on TXU - Stock Picks).

The Name to Know in Zinc, Copper

Market players should buy a stock that has had an "identity crisis," Cramer told viewers.

The company, EuroZinc Mining, which previously held the ticker symbol EZM, has merged with Lundin Mining (LMC Quote - Cramer on LMC - Stock Picks) and now possesses the symbol LMC.

"Lundin Mining has a wider base of assets, which makes it more reliable," Cramer said. And it is the "single way to play the single two hottest minerals in the world: zinc and copper."

Zinc is about to move into the driver's seat, and with Lundin Mining, EuroZinc got two mines which produce more than 70 tones of zinc, he said.

In addition, with the new mix of zinc and copper, the company has become a "prime takeover target," as there are "plenty of mining companies looking to make themselves bigger," Cramer continued.

Although it seems EuroZinc was doing fine on its own with its copper exposure, zinc's price should increase 70% as supply lessens, he said.

"This merger is brilliant, and the stock should be going much higher than we thought," Cramer said.

Mad Mail and Sudden Death

In his "Mad Mail" segment, Cramer told a viewer he believes Evergreen Solar (ESLR Quote - Cramer on ESLR - Stock Picks) could run through Monday, and if not, he recommended cutting it off.

He told one viewer Tween Brands (TWB Quote - Cramer on TWB - Stock Picks) is "fabulous," and advised another to wait for a bounce before panicking out of LifeCell (LIFC Quote - Cramer on LIFC - Stock Picks).

In the "Sudden Death" round, Cramer was bearish on Del Monte Foods (DLM Quote - Cramer on DLM - Stock Picks) and Foxhollow Technologies (FOXH Quote - Cramer on FOXH - Stock Picks).

Lightning Round

Cramer was bullish on Ceradyne (CRDN Quote - Cramer on CRDN - Stock Picks), NYSE (NYX Quote - Cramer on NYX - Stock Picks), Apple Computer (AAPL Quote - Cramer on AAPL - Stock Picks), L-1 Identity Solutions (ID Quote - Cramer on ID - Stock Picks), Cabela's (CAB Quote - Cramer on CAB - Stock Picks), TXU (TXU Quote - Cramer on TXU - Stock Picks), Qwest Communications (Q Quote - Cramer on Q - Stock Picks), Watts Water Technologies (WTS Quote - Cramer on WTS - Stock Picks) and GameStop (GME Quote - Cramer on GME - Stock Picks).

Cramer was bearish on Qiao Xing Universal Telephone (XING Quote - Cramer on XING - Stock Picks), Nasdaq Stock Market (NDAQ Quote - Cramer on NDAQ - Stock Picks), TOM Online (TOMO Quote - Cramer on TOMO - Stock Picks) and MDU Resources (MDU Quote - Cramer on MDU - Stock Picks).

For more of Cramer's insights during the Lightning Round, click here.

Want more Cramer? Check out Jim's rules and commandments for investing from his latest book by clicking here.