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Cramer's TheStreet.com TV Recap: Avoid Tech Price Wars

TheStreet.com Staff

Identify those companies in tech that are waging price wars -- and avoid them, Jim Cramer advised in the TheStreet.com TV's Wall Street Confidential video Friday.

Host Aaron Task said it seems as though the damage has been contained after recent warnings from software company SAP(SAP Quote) and chipmaker Advanced Micro Devices(AMD Quote). Cramer said both businesses have been challenged for some time, with AMD being a repeat warning offender. AMD is locked in a vicious price war with Intel(INTC Quote).

As for SAP, Cramer said it's also another company that he expects to hear negative things about. There probably should have been a heads-up that SAP could go down after Amdocs (DOX Quote) plummeted yesterday, Cramer said, adding that rival Oracle (ORCL Quote) should go down as well.

"There's some sort of negativity going on in this customer relations management business that I can't get my arms around, and until then I can't recommend anything in that space," Cramer said.

Task mentioned that Helene Meisler, a longtime contributor to RealMoney.com, has been saying that Oracle looks like a good short. Cramer noted that Oracle just went from $12 to $18, and there also is a price war in that kind of software.

"You've got to stay away from those," he said of software that doesn't have a distinct proprietary aspect to it. "There are enough places where there are no price wars -- you don't need a price war."

Asked if the bears have been defeated, Cramer responded that it is too early to tell.

"I think that the bears have to make a stand here," Cramer said. "I think that it's Friday afternoon and you gotta knock some stuff down soon. You gotta try to make it look like it's more than just AMD."

Cramer said it is a tough time for the shorts right now, as there is a lot of money that just started coming in.

Moving to oil, Task pointed to the recent rebound in some stocks after ConocoPhillips' (COP Quote) announcement that it will buy back up to $1 billion of its common stock. Cramer called this move "too little, too late." Cramer said there will be a nice bounce to Conoco, maybe to $65, but that it won't last.

"Without a dividend of some size there really is no cushion here," Cramer said. "The buybacks have proven to be somewhat futile in the face of both ETF selling and mutual fund selling." Cramer called most mutual funds "closet chartists," and he said the charts look bad.

In another topic of discussion, Task brought up JPMorgan analyst Barton Crockett's recent downgrade of Blockbuster(BBI Quote) and Netflix(NFLX Quote). Cramer said he does not see a bear case there until the stock goes appreciably higher. Crockett's downgrade was based on a survey that may not pan out, Cramer said.

"I think that we often forget that the actual rightness or wrongness is always secondary to trying to get the big commission," Cramer said. "I think that we always have to -- with a very cynical skeptical attitude, recognize that quality work is indistinguishable from lack of quality work as long as you're a good salesperson."