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Cramer Argues for the Power and Potency of Technology

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One generation takes pride in its own befuddlement about computers. Another thinks those same computers are simply logical and necessary extensions of the thought process, a sophisticated calculator/pad and pen. One generation jokes about how it doesn't even know how to turn on a personal computer. Another gets jealous when a neighbor's hard drive holds more data and is downright livid when a faster microprocessor appears down the block.

Will these two generations ever see eye-to-eye? As an embarrassed member of the computer illiterate cohort, I'm beginning to believe that my crowd will forever be stuck in the pre-computer era. Because of this unspoken gulf between ignorance and downright enjoyment we get what my friend and fellow


member David Owen calls "the endless tech buying opportunity," as people of my generation, particularly opinion-makers in the traditional off-line press, keep thinking that the future will disappear every time some tech company announces an earnings shortfall.

As Owen put it in an e-mail to me the other day, "There is a generational divide that is somewhere close to our age, and on one side there continues to be a huge number of people who think of microprocessors almost as though they were rocket engines that someone might suddenly ask them to take apart and put back together when in fact by this point they might as well be parts of people's bodies."

Owen (both of us are young boomers) believes that computers went from being scary and foreign to being invisible without passing though any stages in between. So no one from the older generation ever even got a chance to learn how to use them before it became too late, and they adopted a position of gleeful ignorance. And, as he puts it, "there are still lots and lots of otherwise intelligent people who figure that the whole thing might just go away."

Owen is on to something. In the inevitable quest to figure out why the market rewards certain companies with higher multiples than others, I am struck by how Owen's observations might provide the key to why so many tech companies forever sell at multiples beneath their standing. If a generation of financial opinion makers is afraid of tech or thinks that is more arcane and scientific and less an everyday occurrence, this generation will always be blind to how entrenched tech has become among the younger two-thirds of the populace.

I think back to all of the times in the last ten years that





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Hewlett Packard

have been slammed by a quarterly glitch, and each time the press has pronounced these companies as esoteric faddish makers of products that will never rival the television or telephone. That the demand for the product has been sated, as if, like color televisions, once you had one you didn't need to get a new one for the rest of your life. This generation won't realize what has occurred until the television and telephone at home are replaced by a PC, something that should be fairly commonplace in three or four years. Then maybe they will discover how you will always sacrifice to get a new more powerful machine with more functions and less time wasted.

It also explains the press's seeming fascination with


at all times, despite the company's retrograde behavior. Apple represents the rearguard action against computers. It stands for a system that novices find easy, that allows easy access -- at a cost of speed and power. But anybody who is really into computers, from my six year-old-daughter to the junior at college, knows that speed and power are the be all and end all of computing. Without those, you are nowhere. Apple is like a toaster that is very easy to turn on but takes forever to toast and then doesn't toast all kinds of bread!

How can all of this make you money? Well, the next time you hear that computer demand has tailed off, as I am hearing now, and that sales are slowing, don't be spooked. Accept the fact that it is just a transition, not a sating. Wait till the carnage is over, and buy.

James J. Cramer is manager of a hedge fund and co-chairman of

. At the time of publication, his fund held open positions in Compaq, Hewlett Packard and Intel. Under no circumstances does the information in this column represent a recommendation to buy or sell stocks. Mr. 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 welcomes your feedback, emailed to