Hang Up on Garmin
In the Thursday "Sell Block" segment, Cramer took aim at personal navigation giant Garmin (GRMN), a stock who's business, he said, is on life support.
Cramer said Garmin may be the first casualty of the Mobile Internet Tsunami, as more and more consumers are opting for built-in navigation on their smart phones, rather than stand-alone devices.
Back in 2005, Garmin's stock exploded, as personal navigation devices for cars became all the rage. After impressive growth between 52% and 62% a year, personal navigation devices now account for a whopping 73% of Garmin's overall business.But Cramer said stand-alone navigation has now run its course, and Garmin's future earnings power have been critically wounded. Remember the Palm Pilot? Cramer said personal digital assistants were also once all the rage, but newer technology has simply made them obsolete. Cramer said Garmin's once proprietary technology has now become a commodity, with cell-phone maker Nokia (NOK) announcing that it'll include free navigation on all its smart phones. "Why pay extra?" asked Cramer. By removing personal navigation from Garmin's business model, Cramer estimated Garmin's true value to be around $26 a share, a full 20% lower than where it trades today. He said the company's long term story is simply unacceptable, and investors need to sell, sell, sell.