This column was originally published on RealMoney on Oct. 24 at 9:41 a.m. EDT. It's being republished as a bonus for TheStreet.com readers.
The national consolidation and rationalization of industries coupled with the slowdown in housing has produced some odd moves, but none more odd than the ascension of
into the sainted pantheon.
Look at these two stocks. Have they had a week where they have not rolled higher? For a half-decade we heard about how they were killing each other and that there was no end to the wars. We heard that they were going to kill each other's margins and businesses and that the telco-cable wars would leave both drubbed and bedraggled.
Instead, they hit 52-week highs over and over again. How did this happen?
First, it's true that the capital goods denouement is playing out right now. The run in the capital goods stocks seems to be over, and in its place are steady slow growers like Comcast and AT&T.
Second, these companies have bought back tremendous amounts of stock. But that's a factor many other companies share.
Third, the consolidation in both industries, cable and telephone, has led to a more benign pricing environment. Comcast can offer a triple-play (cable TV, phone, Internet) that is lucrative. AT&T-Cingular can offer a cell-phone play that is actually, for once, in great shape for profitability now that there are only a handful of cell-phone players and
imploding before our eyes.
There's not that much left to buy, so the companies aren't going to do more acquisitions. Comcast stole Adelphia because the morons there bankrupted a perfectly good cable company. There's no cable left to buy until
goes bankrupt. AT&T was allowed to buy
to eliminate its biggest competitor.
bought price-cutter WorldCom, too.
People were worried about
, but that turned out to be a company that was spending outrageous sums to pump up subscribers in order to have a successful IPO, which was very successful for the company, albeit very unsuccessful for the shareholders -- many of whom were also subscribers. People were also concerned about Skype, and while Skype can take hold, it's the untethered cell phone that people love, with all its bells and whistles and cameras and ringtones and texting, the latter quickly becoming a national obsession. Don't forget that the exploding growth in
Research In Motion
helps these companies, too.
Comcast is now able to add all of these high-end features seamlessly at a time when the dish -- that is,
-- can't. Other than the NFL package, the dish has been left behind.
In another year, lots of onerous cable carriage deals from the 1990s will roll off and further increase Comcast's margins. It's a great story. So is an emboldened AT&T with plenty of staff cuts ahead for BellSouth -- heck, maybe everyone will go! -- plus that juicy dividend and buyback.
These stocks have come a long way. But they have essentially sat out the last 10 years as they bought and bought and bought and competed and competed and competed and missed numbers and missed numbers and failed to grow. That's all past.
They go higher.
At the time of publication, Cramer had no positions in the stocks mentioned.
Jim 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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