Breakups Still Can't Beat Growth Stocks

There is value in the splinters of Tyco and its ilk, but we'd still rather have Google.
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This column was originally published on RealMoney on Jan. 13 at 2:31 p.m. EST. It's being republished as a bonus for TheStreet.com readers.

"Please don't break my company up, it means I have earnings problems!"

That seems to be the takeaway from the big three anti-synergy plays:

Cendant

(CD)

,

Viacom

(VIA.B)

and

Tyco

(TYC)

. In reality, these are companies that are getting split up out of frustration, and the frustration isn't vanishing any time soon.

Why is the market judging all three so harshly? I believe the market's being intelligent. What it is saying is, "We wouldn't have to deal with these pieces if the companies were 'better,' and we aren't going to get more 'growth' from splitting them up." Moreover, if any of these properties were

that

interesting, the private equity guys would just have bought them already.

Now, here's the rub: I believe that's short-term. While I hate Cendant because of Henry Silverman's botching of the company and because I lost money in it, I am sure that some of the parts are worth more than they will be selling for, but not all. I believe that the

CBS

(CBS) - Get Report

numbers on the Street are way too low, and while I am worried about radio, I believe that its television business is being incredibly undervalued. And I want some of Tyco, not all of Tyco.

Still, though, I reiterate that if you expect a stock to pop after a split up you are going to be wrong, because these days we love growth so much that we aren't fooled into thinking about value just because of a split. I would rather have a fast-growing company than I would all the pieces in the world of slower growers.

Which is why

Google

(GOOG) - Get Report

and

Yahoo!

(YHOO)

and

Whole Foods

(WFMI)

and

Broadcom

(BRCM)

and

Qualcomm

(QCOM) - Get Report

and the oil service stocks are all heroes, and Cendant, Viacom and Tyco are such villains.

At the time of publication, Cramer was long Yahoo! and Qualcomm.

James J. Cramer is a director and co-founder of TheStreet.com. He contributes daily market commentary for TheStreet.com's sites and serves as an adviser to the company's CEO. Outside contributing columnists for TheStreet.com and RealMoney.com, including Cramer, may, from time to time, write about stocks in which they have a position. In such cases, appropriate disclosure is made. To see his personal portfolio and find out what trades Cramer will make before he makes them, sign up for

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