This account is pending registration confirmation. Please click on the link within the confirmation email previously sent you to complete registration.
Need a new registration confirmation email? Click here
Stocks Under $10 with 50-100% upside potential - 14 days FREE!

Cramer's 'Mad Money' Recap: Dell's Horrible Choice of Perot

Click here for an archive of Jim Cramer's Mad Money recaps. Click here to get Jim Cramer's Mad Money Post Game video exclusively on TheStreet.com.


NEW YORK (TheStreet) -- Jim Cramer told viewers of his "Mad Money" TV show Monday that computer-maker Dell (DELL) is no longer a company, but rather "the punchline of a bad joke."

Cramer said that today's announcement of the company's acquisition of Perot Systems (PER) is a desperate, and incredibly poor, attempt to play catch-up to rival Hewlett-Packard (HPQ), which purchased EDS in October, 2008.

Cramer said H-P, a stock which he owns for his charitable trust, Action Alerts PLUS, made a brilliant move in buying EDS, as it allowed the company to expand into lucrative, recurring consulting revenues while significantly cutting costs. The deal also allowed the company to expand internationally, he said.

Cramer Clearing House All things Cramer Mad Money Recap Trade With Cramer Free

Cramer said Dell, on the other hand, bought the worst possible company at the worst possible price. He said H-P paid 60 cents on the revenue dollar for EDS, while Dell is offering to pay $1.60 per revenue dollar. The deal is also dilutive to earnings until 2012 and gives the combined companies few synergies or cost savings, said Cramer.

Cramer said the difference between Hewlett and Dell is now staggering. Dell's marketshare is slipping, from 19% to just 14%, while H-P's share is increasing, from 15% to over 20% currently. Dell is not thinking strategically, said Cramer.

According to Cramer, the company would've been better off buying smartphone maker Palm (PALM), whose business is growing, rather than Perot, who reported declines in all of its business units last quarter.

Cramer said while analysts may applaud the move, they simply don't see the big picture. At 30-times earnings, this deal was highway robbery. He said it's not too late to swap out of Dell, and into H-P, if for some reason, you're still long Dell.

1 of 3

Select the service that is right for you!

COMPARE ALL SERVICES
Action Alerts PLUS
Try it NOW

Jim Cramer and Stephanie Link actively manage a real portfolio and reveal their money management tactics while giving advanced notice before every trade.

Product Features:
  • $2.5+ million portfolio
  • Large-cap and dividend focus
  • Intraday trade alerts from Cramer
  • Weekly roundups
TheStreet Quant Ratings
Try it NOW
Only $49.95/yr

Access the tool that DOMINATES the Russell 2000 and the S&P 500.

Product Features:
  • Buy, hold, or sell recommendations for over 4,300 stocks
  • Unlimited research reports on your favorite stocks
  • A custom stock screener
  • Upgrade/downgrade alerts
Stocks Under $10
Try it NOW

David Peltier, uncovers low dollar stocks with extraordinary upside potential that are flying under Wall Street's radar.

Product Features:
  • Model portfolio
  • Stocks trading below $10
  • Intraday trade alerts
  • Weekly roundups
Dividend Stock Advisor
Try it NOW

Jim Cramer's protege, David Peltier, identifies the best of breed dividend stocks that will pay a reliable AND significant income stream.

Product Features:
  • Diversified model portfolio of dividend stocks
  • Alerts when market news affect the portfolio
  • Bi-weekly updates with exact steps to take - BUY, HOLD, SELL
Real Money Pro
Try it NOW

All of Real Money, plus 15 more of Wall Street's sharpest minds delivering actionable trading ideas, a comprehensive look at the market, and fundamental and technical analysis.

Product Features:
  • Real Money + Doug Kass Plus 15 more Wall Street Pros
  • Intraday commentary & news
  • Ultra-actionable trading ideas
Options Profits
Try it NOW

Our options trading pros provide daily market commentary and over 100 monthly option trading ideas and strategies to help you become a well-seasoned trader.

Product Features:
  • 100+ monthly options trading ideas
  • Actionable options commentary & news
  • Real-time trading community
  • Options TV
To begin commenting right away, you can log in below using your Disqus, Facebook, Twitter, OpenID or Yahoo login credentials. Alternatively, you can post a comment as a "guest" just by entering an email address. Your use of the commenting tool is subject to multiple terms of service/use and privacy policies - see here for more details.
Submit an article to us!
DOW 16,746.04 -134.32 -0.80%
S&P 500 1,970.07 +0.12 0.01%
NASDAQ 4,462.9020 +20.2040 0.45%

Brokerage Partners

Rates from Bankrate.com

  • Mortgage
  • Credit Cards
  • Auto

Free Newsletters from TheStreet

My Subscriptions:

After the Bell

Before the Bell

Booyah! Newsletter

Midday Bell

TheStreet Top 10 Stories

Winners & Losers

Register for Newsletters
Top Rated Stocks Top Rated Funds Top Rated ETFs