"Sometimes companies can set the bar way too high," Cramer told viewers, as he examined the earnings of IBM (IBM), a company that appeared to beat the estimates, only to see its shares get clobbered.
Cramer said on the surface, all seemed well on IBM's conference call. The company beat by three cents a share, on 2% revenue growth. On the call, IBM management said they met all of the goals they set on their April call, and gave a bullish outlook for the future.
So what went wrong? Cramer said it wasn't the company's April conference call but its May analysts day, where IBM laid out its roadmap through 2015. Cramer said at that meeting, IBM promised double-digit growth over the coming years, and portrayed unfettered optimism. As a result, analysts provided IBM estimates that were impossible to meet.Cramer said in this case, it wasn't the analysts fault that the estimates were raised so high. He said IBM's call for double-digit growth was unnecessary, and analysts naturally assumed with such a bullish outlook that their short term estimates were too conservative. Cramer said it was bravado that killed IBM shares today, and even with today's plunge he's still not a fan of the company. He instead recommended Accenture (ACN), an Action Alerts Plus stock that posted better-than-expected bookings and growth, and a company that knows how to under promise and over deliver.