received its "going concern" letter from its accountants, readers bombarded me with notes urging me to do work on the company and recommend it to readers.
Wrong on three counts! One, I don't recommend to readers. I tell you what I am doing. Often I do things that are right. I also do a lot of things that are wrong. If you are buying stocks off of my disclosure instead of doing the work yourself, you are a fool. Period.
I remind you that this is an online diary. It is often stream-of-consciousness. It is as close to real time as I can make it. So I read
Saturday morning and I get bullish and then I read the
news and I get bearish. Because, alas, I am human.
I am not made of titanium (as much as my wife's wrist might qualify her for such a dubious honor). When news hits that can change the landscape, I change with it. If I don't I will have the same thing happen to me that happened to
Two, when I looked at CDnow, it looked ugly. This company is losing a huge amount of money. When I analyze Net companies these days I am trying to figure out when they will cross into profitability and whether it will be in time to make it before they run out of money.
Because the window for raising money for dot-coms already public is now closed.
Only a very few blue-chip Net companies can raise money now. This one doesn't seem like one of them.
Three, companies rarely recover from "going concern" letters. When I took accounting at school my professor made an in impenetrable subject especially opaque. Nothing seemed simple. Except the "going concern letter" class. He explained that the last thing an accountant ever wants to do is write one of these. It is a death warrant. You don't write one if you think a company can come back to life.
That's about all I remember from that grueling year of classes. But it has served me quite well to date. I don't think CdNow's prospects will be any exception.
Microsoft's problems are Mister-Softee specific. We are nibbling at thrown-away tech stocks in Europe fairly aggressively.
James J. Cramer is manager of a hedge fund and co-founder of TheStreet.com. At time of publication, his fund was long Microsoft. His fund often buys and sells securities that are the subject of his columns, both before and after the columns are published, and the positions that his fund takes may change at any time. Under no circumstances does the information in this column represent a recommendation to buy or sell stocks. Cramer's writings provide insights into the dynamics of money management and are not a solicitation for transactions. While he cannot provide investment advice or recommendations, he invites you to comment on his column at