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

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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.

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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.
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