James J. Cramer Chats on AOL

JJC chats about today's action, oil service stocks, Greenspan, Apple, Cisco, 3Com, Red Hat and more.
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James Cramer chatted on AOL Tuesday, Sept. 28 at 5 p.m. EDT. As with all chats, this transcript is unedited.

OnlineHost:

Welcome,

TheStreet.com

presents Jim Cramer.

TSCNYjjc:

Howdy--great great turn in today's market!! Let's ramp...

Question:

Jim, do you think we've bottomed or more to go?

TSCNYjjc:

Today had the feeling of an important bottom. if only because Ralph Acampora squawked that things are about to deteriorate further. I said in my last filing that it felt like a bottom and I think we will go higher for the rest of the week.

Question:

What do you think about oil stocks and oil service stocks?

TSCNYjjc:

I think these stocks are all for sale. In fact I penned a piece this afternoon which said that these stocks are signaling a real dive in oil. I would sell them. All of them.

Question:

Hi JJC, if you were forced to buy 10,000 or sell 10,000 AOL right now at 110, which would you choose?

TSCNYjjc:

I would be a buyer, but I am already very long AOL. I would not mind taking another ten thousand though..

Question:

Jim, what is keeping the market in the doldrums now?

TSCNYjjc:

We are still trapped by bonds and by worries having to do with tech weakness and y2k. I am not that worried. Also, we are always fearful of October and that keeps a lid on it too.

Question:

What is your opinion on micron technology?

TSCNYjjc:

I am long MU and I think it works its way higher. There is a dram shortage and it will help MU's earnings greatly.

Question:

Jim. Who do you think are the best analysts of the oil/oil service business?

TSCNYjjc:

I like the Morgan Stanley's team for oil service.

Question:

Is the market hostage to Greenspan's testimony next week?

TSCNYjjc:

I don't think so, in fact, I think that Greenspan has been taken out of the picture by the decline in the market and I feel like we are off Greenspan watch for now.

Question:

What is your outlook on Apple in the near term considering their recent events?

TSCNYjjc:

I think that AAPL's stock is probably oversold but it looks like the stock has had it for now. In fact Jeff, my partner, thinks that the Apple story is finished.

Question:

What kind of market pullback are you expecting for Oct if any?

TSCNYjjc:

I do believe that we will have a down 500 day in October and we are preparing for such here. But I want to emphasize it will come from a higher level, maybe a much higher level.

Question:

Thoughts on amtd?

TSCNYjjc:

I think this group is reflecting a lot of negativity, maybe too much so. I bought Etrade today. I think it is done going down.

Question:

Do you still like CSCO for the long term?

TSCNYjjc:

Cisco remains a core holding of mine and is without a doubt the best internet hardware play.

Question:

Which tech stocks are you buying in this market?

TSCNYjjc:

Today I bought Texas Instruments, Some Intel, some Microsoft, a little more AOL, and some Yahoo and Lycos.

Question:

Mr Cramer, can AT&T handle aol?

TSCNYjjc:

I think the logical question to ask is whether AOL can hurt T if it wants to and I think it could. I think AOL has a lot of momentum and T has NONE.

Question:

Jim. What are your thoughts on Cendant now that it is over 18 months after the announcement of massive fraud. The stock seems mired at $17-18

TSCNYjjc:

I still think that Cendant is a no-own here. I still want to know what happened in that last week of March, And I want to know if Henry Silverman and his team knew things were bad when they reassured us on that conference call. If they did, they should not be running the company.

Question:

Any opinions on RHAT?

TSCNYjjc:

I think RedHat is overrated and overprice. It is in my list of RedHot stocks, but I do not own it.

Question:

What is your outlook on gold?

TSCNYjjc:

I think that gold is overpriced. I would sell gold and gold stocks as I think they were up on a short squeeze.

Question:

Would you buy EXDS or INKT now?

TSCNYjjc:

I am long Inktomi and I think it has a ton of momentum. Exodus intrigues me because Intel unveiled its strategy today and it is not as bad for exodus as I first thought. Exodus is in the sweet spot.

Question:

JC, I'm a big fan. Drugstore.com has been hit bad . Buy, sell?

TSCNYjjc:

I don't care for that internet commerce play. I would not own it.

Question:

What will it take to revive the drug sector?

TSCNYjjc:

You will not get a sustained move up in the drug sector until the economy cools. These stocks do not have big moves up when the economy is growing at the pace that it is.

Question:

Is PSFT a buy? Looks like low risk and if Y2K fears lift people may come back to enterprise software stocks.

TSCNYjjc:

I don't think that PSFT is bottoming and I would not own it for a takeout.

Question:

Mr. Cramer, I'm a big fan. Are still on CNBC? What's your short and long term view on aol? Thank you!

TSCNYjjc:

They are the same. I believe AOL is a premier growth company and I would own it. As far as CNBC, they don't want me anymore that I can tell and I am now on Fox News Channel.

TSCNYjjc:

They believe that cnbc.com is competitive with our little TSCM and I am flattered. But if the roles were reversed I would not have kicked me off. My numbers were too good.

PF Trader:

They are running scared of their ratings vs. TheStreet.com I bet. Great show Jim!!

Question:

Jim, what do think about Qwest Communications?

TSCNYjjc:

I think QWST destroyed its own stock with that bid. I

TSCNYjjc:

would not own it. Period.

PF Trader:

We've had a ot of price action in internet services - new free services popping up and MSFT increasing prices. What do you think the future of net access looks like in terms of price vs. level of services - Will the free guys survive? Will the higher end services need to reduce prices?

TSCNYjjc:

Actually, I think prices are headed higher for the majors. I have to tell you that I was shocked by MSFT's decision but that it makes it much tougher for the free guys to offer the same level of service which is going to be key to the future growth. I am optimistic about the paid model and pessimistic about the free model.

Question:

Is this a good time to pick up some INTC?

TSCNYjjc:

I hope so. I did!!

Question:

Is the msft cloud gone for good from AOL?

TSCNYjjc:

YES. I think that was the big takeaway from the isp announcement. The decision NOT to compete on price changed the whole internet world in my book. That is all people have competed on. It is great news for web business models.

Question:

Why do you prefer CSCO over LU?

TSCNYjjc:

Cisco has more momentum. greater product depth and much deeper management although I like McGuin very much. Chambers may be the world's best ceo right now.

Question:

Jim, Thoughts about the msft/uswb alliance announced today?

TSCNYjjc:

I just saw it; it took me by surprise. I am neither long nor short USWEB.

Question:

When would you be a buyer of Phillip Morris?

TSCNYjjc:

At this point I have just finished reviewing the big Justice department suit and I think MO will win. That said the core businesses aren't doing well and I have no desire to leave myself open to the mass tort bar.

Question:

Your top 5 picks for the Millennium Mr. Cramer please?

TSCNYjjc:

Okay, here goes: AOL, YHOO, CSCO, MSFT, INTC.

Question:

Where do you think Dell is headed?

TSCNYjjc:

I think Dell is headed higher but I have been worn down by it and don't own it. I tried to trade it to the long side today but I feel that the group is very soggy.

Question:

Jim, are all the "old" means of valuation a thing of the past? Its seems as though PE ratios mean nothing but ".com" with no earnings or near term potential earnings is king. Has investing changed?

TSCNYjjc:

Yes, I think that old measurements stopped making you money. I think this is a really important concept that is often forgotten.

TSCNYjjc:

You see, you may think these Red Hot stocks are overpriced, but money managers are in the business of performing and keeping assets under management and it is very hard to keep assets under management if you don't perform.

TSCNYjjc:

Lets say you limited your fund to low p-e stocks you would have done terribly for so long that I think you would be running now.

Question:

Jim, How do you evaluate a company like CMGI?

TSCNYjjc:

I used to do the sum of the parts, but everyone else does that now. I don't really care to own it, as I have many pure plays and I also own shares in a young net company - TSCM.

Question:

Jim, any thoughts on schering-plough?

TSCNYjjc:

I wanted to buy it at 3:30 today and my partner, Jeff, said, "why why why?" How will the stock go up. I said that it was selling below its growth rate and he said, so what, Claritan may come off patent. I backed away and decided not to buy it.

PF Trader:

So when do we get to see YOU and the Chart Man (Gary B. Smith) have a cage match on TheSteet.com? We know you're not a chart fan.

TSCNYjjc:

I have to tell you, if you are not watching our t.v. show on Fox News Channel you are missing some great t.v. I think Chartman, Gary B.Smith, is the finest chartist in the land. You have to see him in action versus Lashinsky.

TSCNYjjc:

I have to tell you that when we first started rehearsing the show I was down on it, I missed squawk and I missed the whole karma of CNBC. But now I cant wait until Fridays and I think the gang at Fox, from my producer Gary Schreier, to Neil Cavuto and Roger Ailes are the best, I mean it, the best people I have ever worked with on t.v.

Question:

What are your thoughts on the MCI Worldcom/Sprint possible merger?

TSCNYjjc:

I think that this would cause a nice bottom in WCOM and I would buy the stock after the deal is announced. That's how WCOM has always worked, it rallies after a deal.

Question:

Do you think Nortel can reach Cisco-like P/E valuations?

TSCNYjjc:

I don't know if it is as good as Cisco but it has a ton of momentum. I sold stock at $50 today and wish I hadn't.

Question:

Is schwab still number one in 5 years?

TSCNYjjc:

This is such a hard question. Boy is SChwab great, just great, but I think with the right combination of mergers, you could have an AOL-Goldman (I am long both) or a Yahoo --Egrp (Long both again) and beat schwab!

Question:

Is AMZN still being held up by the shorts or is there fundamental reasons holding it up? Have you tried to borrow some just to see?

TSCNYjjc:

No, I don't want to short Amazon because it is too heavily shorted (LIKE TSCM!) and I don't short stocks that are that heavily shorted.

Question:

Based on you comments on G and KO, would you recommend shorting them?

TSCNYjjc:

These stocks are too low to short. They were great shorts and I was short them for years. No longer.

Question:

Jim, what do you think of YHOO?

TSCNYjjc:

Well, I am a big fan. You know that. I am long Yahoo and AOL in like amounts--no favorites played!!

Question:

What is your outlook for First Union Bank?

TSCNYjjc:

I wouldn't bank there and I wouldn't own the stock

Question:

What do you think about b2b plays like icge over the next two years?

TSCNYjjc:

I think Ariba is the best B2B but it ran up so much I sold it

Question:

Will PSFT and NEON recover in 2000?

TSCNYjjc:

I don't think so, I don't care for either stock.

Question:

What did you think of the Chase deal today?

TSCNYjjc:

I thought this was a very smart move for chase because chase has extensive venture capital holdings and this will assure they can capture some of that profit on the go out.

Question:

Who do you like in the broadband arena ? feelings on MFNX ?

TSCNYjjc:

I think the MFNX merger with AboveNet hurt the stock. As far as Broadband plays, it is a good one.

Question:

Is RMBS At 60 a value?

TSCNYjjc:

I don't understand the fascination with Rambus. Who needs Rambus???? I don't need Rambus., The Street.com writes about Rambus everyday. Enough already with the Rambus. It drives me crazy. WASTE OF TIME!!

Question:

What's your three favorite chip stocks?

TSCNYjjc:

Intc, txn, cnxt.

Question:

Where do you see aol's stock price being at the end of 1999?

TSCNYjjc:

I think AOL is returning to old highs--I i know that's big but AOL and YHOO have won. They have won and it pays to be long them.

Question:

Jim, what do you think of Wcom if the Sprint deal goes through?

TSCNYjjc:

I would be a buyer of WCOM as long as they did not pay too much.

Question:

What is your view on the broadband companies like Level 3?

TSCNYjjc:

Very, very speculative and red hot. That means I would not take big positions in them.

PF Trader:

Will moving to broadband product lines hurt CSCO in that Level 3 and others are moving faster with product dev.?

TSCNYjjc:

That is a great question. Matt Jacobs who covers this stuff for us is not as enamored of Cisco as I am. For example, he says that RedBack, which we are long, is a year ahead of Cisco in switches. That's painful for me.

TSCNYjjc:

But a few years ago everybody told me nobody could topple NT and Cisco did! (NT has come back though, as has LU).

PF Trader:

Painful for me too Jim!!

Question:

DLJ issued a target price on AOL of $200.00. Due you think that this number is realistic, and if so, what is your time line?

TSCNYjjc:

The analyst who did that, Jamie Kiggen, knows AOL better than anyone else and I would not bet against him.

Question:

What do you think of EMC?

TSCNYjjc:

I want to own this one so bad. I did see how in Fortune it has become one of America's most admired companies.? I love EMC. Jeff feels it has run too much, I tried to buy some into the dip today. I will come back to this stock. This company is a great, great company.

Question:

Your opinion on 3com?

TSCNYjjc:

I sold my 3com in this tape at $29. I wanted to hold on to it, but the earthquake really screwed up a lot of companies' schedules and I was afraid it would hurt 3com. That said I would buy it back at $26

Question:

Dell or Gateway?

TSCNYjjc:

I think Dell is the better company but that Gateway has more momentum right now.

PF Trader:

Jim, as always very insightful - thank you! Everyone remember to watch TheStreet.com!!

TSCNYjjc:

Thanks guys! Don't forget 10 a.m., 6 p.m. Saturday and ten a.m. on Sunday--it is like nothing you have ever seen., it is wild!