Feb. 26, 27: Guest Scott Reamer

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Participants on Feb. 26 included host Brenda Buttner, Jim Cramer, Adam Lashinsky, Dave Kansas, Dan Colarusso and guest Scott Reamer. The transcript is unedited, and phonetic spellings are indicated with (ph).

BRENDA BUTTNER, HOST:

Welcome. I'm Brenda Buttner, and you are connected to "TheStreet.com." We're here to help you make your own investing decisions.

And on Wall Street these days, who doesn't need some help? The markets are turning somersaults. What's next? Here's the "Word on TheStreet."

With us from

TheStreet.com

Web site, Jim Cramer, who also manages a hedge fund, the

Cramer-Berkowitz

hedge fund, and Editor-in-Chief Dave Kansas. And in San Francisco, Silicon Valley columnist Adam Lashinsky. Also joining us here in New York from

S.G. Cowen

, managing director of Internet research Scott Reamer.

Welcome, all.

First topic,

Dow

free fall. It got clobbered this week, closing below the 10,000 mark for the first time since April, and way off its all-time highs from just last month.

Jim, is this a free fall? And you know what, more importantly, do you care?

JIM CRAMER, FUND MANAGER, CRAMER BERKOWITZ HEDGE FUND:

Brenda, it's been up for 18 straight years. What the heck -- you know, what's 15 percent among friends? I refuse to see the panic that the Dow is generating. There's a bull market going on somewhere right now, it just happens to be in a different exchange. It's the

Nasdaq

. If you've got something good, a good story, momentum, I guarantee you, you can go from a billion to $10 billion in six weeks, just as long as you're not in the

New York Stock Exchange

.

DAVE KANSAS, EDITOR-IN-CHIEF:

But Jim, there's a lot of pain. I think there's more pain out there than just the 30 Dow stocks. I think there are a lot of stocks in the Nasdaq, second-grade stocks, that are not doing well...

CRAMER:

Oh, get some Ben-Gay.

KANSAS:

We have a few...

CRAMER:

This is at the most superficial level of pain. There's pain from Merck. It's been on -- has Merck ever had a down day since 1982? There's some pain...

ADAM LASHINSKY, SILICON VALLEY COLUMNIST:

But Jim...

CRAMER:

...in the stocks that have worked.

LASHINSKY:

Jim, it's more by -- excuse me, it's more than about momentum, right? It's actually about growth, and that's what I think you're getting at. The Nasdaq companies that have terrific growth are still doing extremely well. They're worth buying. It's the Dow stocks that you don't care about right now that aren't growing fast.

CRAMER:

What's

International Paper

going to grow, Adam? 3%, maybe 4?

LASHINSKY:

Two, 3%, yes, that's...

BUTTNER:

Scott, what changes this cycle? I mean, the techs go up, so people take money out of value stocks, they put it in the techs, and the techs go up.

SCOTT REAMER, S.G. COWEN:

In my view, it's a liquidity situation. I mean, there's a lot of money coming into the market that's not being put to use, at least not in my sector. I don't know about the rest of the market, but certainly not in the larger tech sector. At some point, that -- they're going to have to invest that money.

They can't sit on it and earn muni-bond returns. They've got to invest it. And they're going to find the names that aren't the International Papers. They're going to find the names that are growing 30%, 40% sequential growth and revenue, certainly in the Internet space. And there's certainly other tech names that are -- that fit that bill. They'll invest in those.

BUTTNER:

Dave, do these value stocks ever get cheap enough?

KANSAS:

Well, eventually, I guess you get down to cash levels or things like that. But, I mean, they're not that attractive. It's a tumultuous market. And I think you need to see a lot more pain than we've seen so far before the I-Papers or these other kind of traditional heavy Dow-type stocks become popular.

I don't think there's any appetite for them. Like you said, people are waiting to put their money to work. But I think they're waiting to put their money to work in places they think they're going to get a quick return. That is still in the blood of people who are in this market.

(CROSSTALK)

LASHINSKY:

And, Brenda, I would argue, people aren't waiting to put their money to work. There's the category you have that you've left out are IPOs, not necessarily the kind of IPOs you saw in '99, but this market just keeps creating new IPOs, and people are putting their money into those.

BUTTNER:

But Adam, you can really go from hot to has-been in this market very, very quickly...

LASHINSKY:

Ain't that the truth.

BUTTNER:

...remember when eToys...

(CROSSTALK)

CRAMER:

...about a situation I'm close to.

BUTTNER:

What sector has the most steam to go forward?

LASHINSKY:

Well, the sector of the moment is B2B e-commerce. These are the Internet companies that are -- they're commerce, but they're business-oriented as opposed to being consumer-oriented. That's got steam. I'm very uncertain how long the steam will last. The other thing is, the companies that are making products and doing services, that are helping grow the Internet, are having fabulous growth, and they're still good to buy. There's no reason not to.

CRAMER:

Well, well, I wanted to ask both you, Adam -- and I'll tell you, you've got to tell me whether this is true or not. But what happened to

Scient

this week? What happened to Vient (ph) this week? Scott knows this sector too, because he's put me in it when it was considerably lower.

These two sectors, the Web design, Web consultant, they've blown up, haven't they?

REAMER:

They have. It's about the business model.

You know, the technology Adam talked about, the infrastructure of this new economy that's being built, those things scale. You can sell hundreds of millions of those with one sales guy. You know, when you go to, you know, consult with Ford or GM about their Internet strategy, you know, you've got to put bodies on that. That's not a business model that can get from $1 to $10 billion, as you've suggested, any time soon.

So people -- has everything to do with the characteristic of people collapsing their time horizons. They want returns, and they want them quickly, because those are tied for the P&Ls that are, in fact, doing well and fast...

(CROSSTALK)

CRAMER:

Well, Adam, do we short these?

LASHINSKY:

No, well...

CRAMER:

I mean...

LASHINSKY:

You know, I'm not going to tell you that. But there are these two things that tech stock invents -- investors want. They want high gross margins and they want hypergrowth. The consulting companies you're talking about can give them hypergrowth. That's why the stocks have run. They can't - - they're not profitable, you know, hugely profitable software companies never can be. As you pointed out on the site, they've got to invest in people. That's very expensive.

KANSAS:

And I think on top of that, some of the older consulting companies are not stupid. They've come back...

(CROSSTALK)

CRAMER:

They figured this thing out.

KANSAS:

Educates (ph)

,

Anderson Consulting

, these guys are not sitting back. They're pouring a lot of resources to fight...

REAMER:

That's a great point.

(CROSSTALK)

BUTTNER:

Jim, what undermines tech? What is it that...

CRAMER:

You know, we actually -- honestly, I'm driving up here, and on the cell phone with me, and he says, Jim, what undermines tech? I said, we asked each other that every five minutes. Maybe nothing undermines it. I mean, you know, Intel, Intel, Intel has a huge pull up, I don't know, this whole tech rally has been done without Microsoft, which is under a huge cloud in the Justice Department.

I don't know what stops it. I saw Cisco Systems, 10 million shares come in for sale, boom, they take it. I don't see an end. I'd rather think of this continuing.

LASHINSKY:

I'll chime in on that, Jim. From the view of the Valley, you're right, nothing undermines tech. Some things undermine technology companies, and that's when they stop growing as quickly. So, you know, I've made favorable comments about Dell and Microsoft. I think they have, you know, great things in front of them. But they're not growing as quickly as they used to. That undermines a tech company.

Nothing for the next two to three years undermines Silicon Valley and tech companies elsewhere in the country and the world.

BUTTNER:

OK, Adam, you have the last word on TheStreet. Scott Reamer from S.G. Cowen, stick around, we'll see you in a few minutes when we check up on the stocks you picked on our show last fall. And Jim will be there as well to put them to the test.

But up next, ever wonder what Cramer thinks of your favorite stocks? Ask Cramer, right after this.

BUTTNER:

Welcome back.

You've got a favorite stock, he's got an opinion, I guarantee it. So it's time to Ask Cramer.

That's right, Cramer is back, and he's rarin' to go, just look at him, with his bottom line...

CRAMER:

Hit me.

BUTTNER:

...on the stocks that you're asking about. And let's go straight to the phones...

CRAMER:

not going to give you any of that, like, long-term hold in the other networks. Oh, that's a very fine...

BUTTNER:

None of that, none of that...

CRAMER:

That's a very fine holding...

BUTTNER:

...much stronger .

CRAMER:

Don't worry about that holding.

BUTTNER:

OK, all right. Kyle from California, you're on the air.

CALLER:

Hi, I'm Edna Payne (ph) in retail.

Costco's

been pretty strong, and they had a big move today. Any thoughts?

CRAMER:

I don't want to be in Costco. If I have to be in that segment at all, I would rather be at this point in

Wal-Mart

, which hit a 52-week low.

BUTTNER:

Bob from New Mexico, go ahead.

CALLER:

Yahoo!

, right now.

CRAMER:

Oh, excuse me, I'm long Yahoo! It's killing me. I say stay long. There's better times ahead.

BUTTNER:

You're sticking with it. All right, Carl from Ohio, let's hear what you've got to say.

CALLER:

Yes, Jim, I'd like the long and the short...

CRAMER:

Telefonos de Mexico

...

BUTTNER:

Telefonos de Mexico.

CRAMER:

Hey, you got a good one there, that one doesn't know how to go down. I like that stuff.

BUTTNER:

All right. Mike in Kansas, what stock is your favorite?

CALLER:

I'm looking for

Cerner Corporation

.

CRAMER:

Why? Next.

BUTTNER:

OK. A sell on that one, huh?

CRAMER:

Yes, I don't even have the time to say sell.

BUTTNER:

OK. Richard from Illinois. Hello?

CALLER:

Yes,

Citrix Systems

, very volatile, 88%.

CRAMER:

I missed the first 200 points, I'll probably miss the next 200 points, but I think it's a good stock.

BUTTNER:

OK. Jeff in Washington. What's your stock?

CALLER:

Yes,

InfoSpace.

CRAMER:

Infospace, you know...

BUTTNER:

Dot.com.

CRAMER:

I'm long, I'm long Infospace. Matt.com Jacobs, says it's his favorite stock. He's in my office. You're in good shape.

BUTTNER:

OK. And we go to Ann in New Hampshire.

CALLER:

My stock is

Reebok

.

CRAMER:

Why? Sell, sell. Don't even get off the phone. Hit the Sell button on your PC.

BUTTNER:

All right, Wade in Georgia.

CALLER:

Yes, Jim, I would like your opinion of

Phone.com,

which I am long, by the way.

CRAMER:

Well, you're right to be long it, and I say good luck to you.

BUTTNER:

All right. Evan in Washington. Go ahead, what's your stock today?

CALLER:

Oh,

TIBCO Software.

CRAMER:

Oh, man, what a hot one. You know, I heard they were going to do a secondary, and they didn't. I have now sat out the last 10 points of TIBCO. This stock has 120 written all over it.

BUTTNER:

When you say they're going to do a secondary, what do you mean?

CRAMER:

I heard that they were going to issue a lot more shares, so I sold my stock after the split. What a winner. This guy's going to have great business model.

BUTTNER:

OK, Judy in California, go ahead.

CALLER:

Hi, I'd like your opinion on

Harbinger.

CRAMER:

Harbinger, no. If you have to be in that sector, I would much rather see you in B2B plays like

Portal

or

BEA Systems.

I am long Portal, I am not long BEA.

BUTTNER:

All right, Sandra in Connecticut.

CALLER:

AOL,

please.

BUTTNER:

Oh, boy, that stock hasn't had a break since the announcement.

CRAMER:

Oh, doctor (ph). Well, you know, I'm long AOL. This one is probably going to haunt me to my grave, because I've ridden it down from 80 to 60, committed the cardinal sin. I'm staying long AOL.

BUTTNER:

You are?

CRAMER:

I like the combination.

BUTTNER:

But isn't that a long-term hold, are you saying?

CRAMER:

No, it's very unusual for me, coming to the

Church of What's Happening Now

. To stay long America Online, but I am.

BUTTNER:

All right, well, let's go to our email. We have Charles who wants to know why

IBM

is down so much...

CRAMER:

Because it's not that good a time. IBM had a bad fourth quarter. I think this first quarter's been rough. Bunch of analysts were dumping all over it last week.

BUTTNER:

But it's made sense to buy IBM on the dips before.

CRAMER:

Well, maybe it doesn't this time.

BUTTNER:

And you think not?

CRAMER:

I'm not buying it.

BUTTNER:

All right, OK. And Mike wants to know if

QLogic

is too high. That -- the...

CRAMER:

Well, QLogic's one of those stocks...

BUTTNER:

...like this.

CRAMER:

...that you'll talk about. It's like everybody's got QLogic except for me. I'm on the subway, the guy's got QLogic, this stock is an up stock. I wish I owned it.

BUTTNER:

You do?

CRAMER:

Yes.

BUTTNER:

And why don't you buy it now?

CRAMER:

Because it's -- I keep thinking that the moment I get in, it'll go down.

BUTTNER:

The woulda coulda shoudla, you're not supposed to do that, Jim.

CRAMER:

I know, the moment I

am long QLogic, it's over.

BUTTNER:

Alright. Lance wants to know about

Ciena.

CRAMER:

You know, Ciena is -- is going to buy Ciena, this week Ciena's almost got as big as

Tellabs.

I think Ciena buy in Tellabs. I say Ciena's a winner. I'm not long it, I wish I were.

BUTTNER:

OK. A stock that you've been talking about for a while,

ICG,

Laurie wants to know about.

CRAMER:

ICG, I think -- ICG said this the other day -- we're going to see losses as far as the eye can see. That's a little troubling, but this stock is not about earnings, it's a good long-term hold.

BUTTNER:

Alright, no wimpy long-term holds from this guy.

BUTTNER:

Don't go away, Cramer and company will talk -- be talking more stocks. Last fall, our guest stock picker said

Amazon.com

would be amazing. Was he right?

BUTTNER:

Welcome back.

It's time to check out the "TSC Scoreboard." With us once again is Scott Reamer from S.G. Cowen, and from TheStreet.com, Jim Cramer. Also joining us, editor Dan Colarusso.

Scott, when you were with us last September, you talked about three stocks that you liked. The first was Amazon.com. By December, shares in the Web retailer had nearly doubled, but the stock has since given back almost all that gain. What do you think about it now? Is it time to get in?

REAMER:

In my view, absolutely. I'm still a lover of this name, as it were. It's half as expensive as it was before, and I was buying it then. People are buying this because in three years, this is going to be a huge, huge company with enormous, enormous value.

CRAMER:

Scott, huge company? I mean, no offense, but...

REAMER:

Absolutely. In terms of market cap, sure, but in terms of revenue, no way. We're going to see growth beyond this well, well into the next several years at least.

CRAMER:

But retail's gotten very tough. Why do I have to own a retailer? Isn't this a retailer in the end?

REAMER:

And that's a great timing call, which I'm terrible at, and I'll admit.

(CROSSTALK)

REAMER:

But this is an investment, not a trade.

DAN COLARUSSO, EDITOR:

When do the expenses at Amazon start to come under control?

REAMER:

They've already started to come in control. We've seen the low water marker in this case, high-water mark of expenses. By the end of this year, they're going to be in a single-digit operating mode. Matter of fact, my prediction is that they're actually going to be profitable by the end of this year.

BUTTNER:

By the end of this year.

REAMER:

On an operating basis.

BUTTNER:

All right. Next stock, Web advertiser

DoubleClick,

which your company brought public in 1998. It's a winner, shares are up about 60% since you picked it last September.

Where to from here for this stock? Friday it was up big, but it's very volatile.

REAMER:

Very volatile. As people start to understand the name, they're either, you know, bullish or not bullish. In fact, we've got two warring camps here. This is a model that's come under significant change over the last several weeks, last several months, as people understand the data business. It's a complex thing, but at least to say, it's a high-margin, high-growth business that they're just about to enter into.

COLARUSSO:

Well, how much growth is there if these privacy concerns start to really weigh on this company? They're trying to get 5 million profiles in their database. Right now they're at about 200,000 or so. How do we get there if the game changes?

REAMER:

The game's not going to change unless Congress enacts some sort of law that changes the game, in which case it affects AOL-Time Warner, because that's the basis of that transaction...

(CROSSTALK)

REAMER:

...everybody.

CRAMER:

You know, you know, I hear you. I saw what you put me in DoubleClick 50 points ago, and I thank you, I thank you on national TV. However, we sold our DoubleClick this week, and the reason we did was because the rap on DoubleClick was, hey, they know everything about you. That's the great thing. Now suddenly it's like, Oh, my God, they know everything about you...

(CROSSTALK)

CRAMER:

...the worst thing. How do you flip-flop?

REAMER:

Yes, well, frankly, the timing issues are what concern me too. You've got an attorney general that just, you know, filed a suit, 49 others waiting to file...

CRAMER:

general.

REAMER:

I'm sure. Yes, you've got a lot -- 49 potential negative catalysts coming up. If you can get through that, if you can get through that, this is still a fantastic investment. End of the year, much higher price.

BUTTNER:

And finally, the last stock is

HotJobs.com

, which is from Spanking Arm (ph), also brought public last year. Shares of the online recruiter soared to 48 in December but have come right back to just below where they were when you picked the stock last five -- last fall. What do you say now?

REAMER:

They're suffering from effectively the rest of the B2C malaise effect we've seen -- you know, if they've had two quarters since going public, since we last talked about them. Each quarter they blew away Wall Street's revenue estimates by 30%, 40%, 50% in some cases. That's going to continue effectively 'till the market starts to value those companies, this thing probably doesn't take off any time soon. But certainly again by the end of the year...

CRAMER:

Well, what worries me about this is that it is just part of a cohort. You had the Super Bowl ad, stock goes up, then, you know, reports a good quarter, then it goes down. What I'm worried about is, what gets me to 32 between now and three months from now?

REAMER:

Three months from now? You know, significant new partnerships, announcements from the company, in fact, that they've had new product sales. In fact, they just launched this new product that none of us have in our model, none of it, it's all incremental -- things like this. And they'll be presenting it at various industry conferences, and that should help the information flow.

COLARUSSO:

What about the barriers to entry? I mean, this doesn't seem like it. I mean, I know 100 recruiters on Wall Street, you know, and those guys are in business. What's going -- what's to stop them?

REAMER:

People used to say this about Yahoo! and the rest of the gang. There aren't any barriers to entry except for the fact that they were there before anyone else, doing this very thing. They've got major Fortune 500 companies as customers. Those people aren't going to check out, you know, BobsRecruiting.com. It's simply not going to happen. They have infrastructure and a software that is second to none.

BUTTNER:

Scott Reamer from S.G. Cowen, thanks for being here. We look forward to having you on again.

Well, last week on this show, you heard our Dave Kansas predict the Dow would close below 10,000. He was right. What will Dave, Cramer, and the rest of the gang have this week? Predictions are up next.

BUTTNER:

The question is, what's going to happen in the market? And what does it mean to you? It's time to get predictions.

Rejoining us from TheStreet.com are Jim Cramer, Dave Kansas, Dan Colarusso, and, over there in San Francisco, Adam Lashinsky.

All right, Jim, we start with you. What have you got this week?

CRAMER:

Another 400 points of pain in the Dow, and then the pain's pretty much going to subside. I think we're going to see lows in the Dow very shortly, and then you can just pick among the rubble and make some money.

BUTTNER:

And at the same time...

LASHINSKY:

Why, Jim? Why does it stop there?

CRAMER:

Why does it stop there? Because I think that you could have -- you know, you're talk -- I'm -- I -- look, that is still, that's by no means , you know, not a little move, it's down 17, 18% correction. But you'll begin to get situations where people will be saying, Well, we do have some growers here that are growing at, say, 16, 17% that are selling for 15, 14 times earnings.

And then traditional matrix will come into play, and we'll be able to make some money.

BUTTNER:

And at the same time, you see the Nasdaq continue to go up?

CRAMER:

Oh, yes, that's a bull market.

BUTTNER:

All right, OK. Dave?

KANSAS:

I think what Jim was trying to get to was that

Microsoft

is actually going to be the catalyst that's going to help the Dow start to recover here, and I think in the next couple of weeks we're going to see some kind of clarity from Microsoft...

(CROSSTALK)

BUTTNER:

Why clarity? What, is there going to be a settlement? Is it going to get broke up? What?

KANSAS:

I -- OK, yes, there will be a settlement, it will not get broken up. And that's all that people are going to need. It's down very sharply from the tie (ph), I mean, way down.

CRAMER:

You think too?

(CROSSTALK)

KANSAS:

Yes, absolutely. Yes, people are going to realize, OK, you know, Microsoft's still juggernaut.

CRAMER:

I think the company really its position.

BUTTNER:

You liked it, Jim, last week, you liked Microsoft. You still buying?

CRAMER:

I'm still. I thought the government hardened its position this week.

BUTTNER:

OK, Adam.

LASHINSKY:

Well, aside from a settlement, which I've been expecting to happen, I'm going to go ahead and disagree with my boss here. By the end of the first quarter,

Cisco

is going to overtake Microsoft as the world's most valuable company.

(CROSSTALK)

KANSAS:

You're kissing up to Jim, and...

(CROSSTALK)

KANSAS:

...check the contract, I've...

BUTTNER:

Adam, why do we care about that?

LASHINSKY:

Well, we care because, you know, Cisco currently is just the hottest company in the world. I looked at a story I wrote two years ago where an analyst told me Cisco can't buy every company out there. Guess what? They can buy every company out there.

BUTTNER:

Another buying binge. All right, Dan.

COLARUSSO:

OK, off the tech stocks for a second. The big bank, big broker deals are going to start happening. Morgan Stanley Dean Witter is going to be the first. They were the trend setter in the mergers, they're going to be the first ones to come down and either buy a bank or get bought by a bank before the end of the second quarter.

LASHINSKY:

Who are they going to buy?

BUTTNER:

As an investor, why do I care?

COLARUSSO:

Why do you care? Because the financials have been beaten up a little bit. It's time for this consolidation to begin in the sector. It's going to signal.

LASHINSKY:

Who's the target, Dan? Who are they going to buy?

COLARUSSO:

Not sure. I'm not sure. I would say a midsize bank. They need to be in that business.

BUTTNER:

And now we want to hear from you. It's simple. Just go to TheStreet.com Web site, click on the TV page, and rate the predictions. And if you want, feel free to send us a question or a comment.

And right now on the site, you can check out the online broker survey. You know, there are over 150 online brokers, and we want you to tell us which ones you like and you don't like. This is time to air your gripes, to speak your mind. We've had a phenomenal response with that, haven't we?

CRAMER:

You know, I'll tell you something. We find one that does poorly, Dave, you and I, we're going to bury them both. We don't care. You could be an advertiser, we're going to bury you.

BUTTNER:

There he goes, mincing his words again. All right, that's going to do it for this week's TheStreet.com. We'll see you here again next weekend. And until then, we hope you invest wisely.

END

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