Web consolidation continues today with E*Trade's(ET Quote - Cramer on ET - Stock Picks) acquisition of Web Street Securities(WEBS Quote - Cramer on WEBS - Stock Picks). Web Street joins Agency.com and Skymall.com in the recognition that it's better to join an established player now, and get the 40% to 50% pop off of a really low level, than to hang out and be doomed to oblivion.
Frankly, I expected more and faster consolidation than what we have had so far on the Web. Memories of high prices and high valuations, however, have kept most of the mergers from happening. Only after those old prices get recognized for what they were (false, unrealistic spikes or short squeezes) will more deals occur.
Take Web Street. Sixteen months ago Web Street traded at $60. While that was a brief momentary spike, the stock traded for a long time between $10 and $20. All of those prices are severe impediments to getting a deal done. Time, however, heals all wounds, including the wound of a price that nobody took advantage of but that sure made everybody feel rich. Now, a logical deal -- and this deal is extremely logical for both parties -- can get done. Look for more of these buck-or-two companies succumbing to bids at hefty premiums to where they are, but massive discounts to where they were.
Jim Cramer
RSS
