Jan. 1, 2: Guests Ryan Jacob, Gene Walden and Ken Schapiro

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Participants on Jan. 1 included host Brenda Buttner, Jim Cramer, Herb Greenberg, Adam Lashinsky, Dave Kansas, and guests Ryan Jacob, Gene Walden and Ken Schapiro. The transcript is unedited, and phonetic spellings are indicated with a (ph).

BRENDA BUTTNER, THESTREET.COM:

Hi, everyone. I'm Brenda Buttner and you are connected to the new millennium. This is a special edition of THESTREET.COM.

So, here's the question: What's the best way to make sure your 21st-century investments will be as successful as the ones you made in the 20th or even more so? Let's get "The Word on the Street."

We've put together a very special group for the new millennium: from THESTREET.COM, Jim Cramer, who also runs a hedge fund, and senior columnist Herb Greenberg. Also joining us, Ryan Jacob from the Jacob Internet Fund. He knows high-tech companies as well as anyone on the Street. At his last fund, he rode the dot.com wave to a return of over 500% in just 18 months; plus, Ken Schapiro, who is president of Condor Capital Management. Ken's firm manages $370 million in private accounts. And in our Fox central studios is author Gene Walden, who has contributed to many business publications, and most recently has published the "100 Best Stocks to Own in America."

Welcome all, and happy new year.

OK, so railroads, automobiles, plastics, computers and, of course, the Internet -- all have meant big lifestyle innovations and huge returns for any investor who identified them early on. Back in 1993, Internet use was growing by more than 300,000%. If you knew that, you might have had a pretty good tipoff of bigger things to come.

So, what's the next best thing? And maybe more important, how do you figure out what the next big thing is? Jim, what's on your radar screen?

JIM CRAMER, THESTREET.COM:

OK. I'm looking at business to -- mobile business. Everybody's talking about business-to-business.

BUTTNER:

Right.

CRAMER:

I think the next big thing will be how fast, how quickly you can get it on some hand-held device, not the computer, so you can take action. It's why I remain long Nokia, which I feel is in a terrific position to be able to benefit from this next wave. I haven't even been able to get my arms around most of the companies that are doing this. It's very early. But I feel like the business-to-business craze I was almost late to, and it turned out there was another 1,000%. Can't start these too early.

BUTTNER:

Right. Ryan, you -- this is your specialty. What do you see in the Internet?

RYAN JACOB, JACOB INTERNET FUND:

Well, I would agree with Jim to some degree. I mean, we definitely will see the Internet move off the desktop. And what that will do is drive more Internet usage. Today, we only have about 40% of all households online, and outside the U.S. it's in the single digits. I think the real story over the next few years is going to be internationally, and we'll see some of the U.S. companies benefit from that.

HERB GREENBERG, THESTREET.COM:

But you know, you're still talking about the variations on this theme, and I still think the one thing that hasn't been dealt with yet, but has to -- people are sick hearing about it -- broad-band, and still making it whatever it is that's going to make it easy for us to click it on wherever we are, even before we get to the mobile part.

JACOB:

I think that's where the application service provider's technology is going to come in; where you're going to see the servers and the remote access of it happening; where people are actually -- where the programs are going to be kept at a server farm, and you're going to access it remotely. This way, you can click it on easy and more efficiently.

BUTTNER:

Gene, isn't there a danger of trying to identify the next trend? I mean in the late '70s, you could have said mainframes and PCs clobbered them. Should you be more diversified in this sector?

GENE WALDEN, BUSINESS/FINANCIAL PUBLISHER:

Well, yes. I mean, if we're talking 100 years out here, throughout the next century, I think the Internet is -- it's got 10, 15, 20 good years of dynamic growth. But what is the next Net? I think one of the biggest problems we face right now is urban traffic -- rush hour. This is a growing problem. I think if somebody can come up with a transportation system that solves that problem, that's the next Internet.

BUTTNER:

I'll vote for that one. OK. Well, this should be fun. Say you can own only one stock in the new millennium. What is it? Everybody here on the spot -- we'll except, Herb, of course, because he says that stock doesn't even exist.

GREENBERG:

No, I don't believe that stock exists yet. I think we'll learn about it at some point way in the future.

BUTTNER:

OK. Jim, I know you'll give me an answer on this -- one stock for the new millennium, what is it?

CRAMER:

OK. I own the stock. It's Cisco. I'm talking about a company that reinvents itself every time there's an important trend. This company will see the next big trend ahead of everybody else. I'm going to make a bold statement. I couldn't work for anybody else the rest of my life, but if I had to work for someone other than Cramer Berkowitz, I would work for Cisco. I think this company has its act together entirely. I want to be long it. I want to own it. I wear Cisco pinstripes to bed.

BUTTNER:

Ryan, you've been looking for the next Cisco, but what do you think of this big established leader?

JACOB:

We actually think that one of the companies that really has the opportunity to break out this coming year is Priceline.com. This is a company that really had a lot of fanfare with its IPO in the springtime. Some question marks as to whether or not they could eventually make this model profitable. We think in the next 12 months, they will. And all they've done really since their IPO is execute flawlessly, and we think there's a lot of upside left.

BUTTNER:

OK. We're going to get back to that. It's a very controversial stock, but Gene Walden, your book is called "Best 100 Stocks to Own in America," but I need you to narrow it down to one.

WALDEN:

Well if I'm looking out, again, 50 to 100 years, I want a stock that saves lives. And that's why I like Merck. It's been around since 1888; it's the best pharmaceutical company in the world; it has been for a number of years now; it's got great research, great management, and I think it's still going to be thriving and saving lives 100 years from now.

BUTTNER:

I don't know, what do you think, guys? Merck could be the greatest thing since aspirin, but it's fate is determined by Pennsylvania Avenue, not Wall Street. There are too many regulatory issues here to bet on drugs, I think.

GREENBERG:

I don't know. They, you know, this is one where if you're looking long term, remember, not short term, because I think I know what you...

BUTTNER:

That means a week.

(LAUGHTER)

A week to two weeks.

GREENBERG:

Because this company does have a great pipeline in front of it, doesn't it? They have connections with more biotechnology firms, 30 biotechnology (inaudible), I think.

GREENBERG:

A great pipeline, Herb? I see it with four blockbuster drugs going off patent protection...

BUTTNER:

Right.

GREENBERG:

... in the next two years. I don't see a great...

WALDEN:

But what about the future?

CRAMER:

I'm with the -- I'm with the Condor man over here.

(CROSSTALK)

BUTTNER:

Pfizer spends 20% of revenues on R&D on new drugs...

GREENBERG:

But you're talking...

BUTTNER:

... and this -- and Merck spends 7%.

GREENBERG:

Gene, help me here. We're talking...

(LAUGHTER)

No, we're talking -- but I still say they have tremendous biotechnology connections. This company has 30 -- three dozen biotechnology venture capital investments.

(UNKNOWN):

You know, Herb, that could be a ways away.

WALDEN:

And, again, you're talking about a two-year period here. We're looking at 10, 15, 50, 100 years down the road. This is a company that has survived and thrived for many, many years because of their pipeline, because of their research. And I just have faith in their management and their research capabilities that they will continue to come up with new formulas and new medications that are going to be very successful for the long term.

BUTTNER:

OK, guys, we have to take a very short break. But when we return, Ryan Jacob and Ken Schapiro give their stock picks for the new millennium. I think you're going to be surprised by their choices.

BUTTNER:

Welcome back. So, if you could only own one stock in the new millennium, which would it be? For Jim Cramer, Cisco. And Gene Walden picked Merck.

Now we get to hear from Ryan Jacob, from the Jacob Internet Fund, and Ken Schapiro, from Condor Capital Management.

Ryan, you gave us a sneak peek in the last segment. Priceline.com. Great idea. You throw in Captain Kirk, and, you know, you think it's all going to be all right. But that stock's had a lot of trouble lately.

JACOB:

It's had trouble, no question, ever since its IPO. But Priceline.com really embodies everything we look for in Internet stock: humongous market opportunity, low cost structure. One of the things that we're very skeptical about when they came public was their ability to turn gross margins positive. They had negative gross margins when they went public. As they stand today, they're a positive 12%. That number could go to 15% in the fourth quarter. They've definitely played on expectations, expecting a flat fourth quarter. We don't believe it. We think they're going to have a great fourth quarter, and we think it's going to propel the stock in the next year.

CRAMER:

Ryan, they've introduced this -- groceries. We've seen the ad campaign. I think it's a pretty great ad campaign, to tell you the truth. The rap I hear is that if you use it and they're out of the product that you have to come back and that you have to check out twice at the counter. When can they solve those problems? That seems to be the substantial hurdle for me.

JACOB:

Well, it's true. You do have to separate your groceries, no question. But for Priceline.com, so far it has taken off, and it's done very, very well in the New York market. They're just starting it in Philadelphia.

CRAMER:

You have a good read, really, so far?

JACOB:

Absolutely. No, it's...

BUTTNER:

But now they're counting on yard sales?

JACOB:

Well, the important thing to realize, as a Priceline.com shareholder, is both of these items aren't owned by Priceline. They're licensing out these divisions, and these are high-frequency items. It's going to drive a lot of traffic to their site. People are going to get a good experience on the grocery system, maybe using the yard sale; consider them for airline tickets, hotels or rent-a-cars or some of the other areas they're looking to go into.

CRAMER:

It's still so hard to understand. You go to that grocery site, you have to call them up and get walked through to understand how to use that. Now what's -- I don't see what the attraction of that is.

JACOB:

Well, so far, you know, in just people, you know, we've spoken to, people have actually found it quite easy, and they like the idea. They've seen great bargains. They're cutting their grocery bills by a quarter or even in some cases by half. And, you know, when people save money, Priceline.com is driving commerce, and that's the way the Web's going.

CRAMER:

Ryan, you know, in the whole travel industry they've been cutting and cutting and cutting the commissions. Don't you think it's going to affect Priceline eventually?

JACOB:

Not really. Because the way the structure is set up...

BUTTNER:

I'm sorry, Ken, we've got to go straight to your stock, all right?

SCHAPIRO:

OK.

BUTTNER:

What -- you like Intel. Why?

SCHAPIRO:

It's vertically integrated. They've been buying -- they bought six major companies in the marketplace. They basically want to make it so that if you're sending a piece of data on the Internet, that they want that to hit as many Intel processors as possible.

We think it's a premier company for the future.

BUTTNER:

Gene, is this on your list?

WALDEN:

Well, I can tell it's been in several additions of my 100 best stocks book, but I think that in 50 years the Intel Pentium processor's going to be, along with Windows operating system, in the Smithsonian Institute.

I think there's going to be a lot of competition in that market, and that's great for the next five, 10 years, but I don't know beyond that. I wouldn't say this is one of those stocks for the full century.

SCHAPIRO:

I think you have a situation with excellent management. You have Craig Barrett; you have Andy Grove. They're going to reinvent themselves when it's important. They're starting to reinvent themselves today.

CRAMER:

I'm long Intel. Who's after Barrett?

SCHAPIRO:

I don't know who's after Barrett.

CRAMER:

Yeah, that's right.

SCHAPIRO:

No, that's true, Jim.

(CROSSTALK)

CRAMER:

That is the word. That's the word.

GREENBERG:

Well, the other issue I've been looking at with this company, and I think it's following on Gene, is that this product becomes a commodity. I mean, the pricing pressure to me is a big issue.

CRAMER:

That's same old, same old for me. It's a great manufacturing company. I just wish there were someone; you know, we had Noyes (ph), we had Moore (ph), we had Grove, we have Barrett, and now, we don't have anybody.

BUTTNER:

So they're going to have to prove that they can go from the PC, though, to the cars and the appliances and all the rest? That's the main test.

SCHAPIRO:

You know, either getting in the communication business or going into Cisco routers or not going into necessarily the router business, but they're going into the products that make...

GREENBERG:

Well, you know, they do have this venture capital business, and they've invested like $4 billion in a bunch of other companies, so they are playing the field all over the place with all those companies and taking the technology.

CRAMER:

Look, I still think the near term is great. It's just I was conscious of what Gene was saying. Look, I mean, I think that in many ways, yes, I like Merck more than I like Intel out 50 years.

(LAUGHTER)

But 50 minutes is the time horizon I've been on.

BUTTNER:

Fifteen. OK. Ryan Jacob, from the Jacob Internet Fund, and Ken Schapiro, from Condor Capital Management. Also, author Gene Walden. Thank you all for being here for this special show.

So, now we heard the stock picks for the new millennium. I bet you want predictions. What do personal computers and dinosaurs have in common? You'll want to hear this next on THESTREET.COM.

BUTTNER:

Welcome back. So, what's going to happen and what does it mean to us investors?

Today ,we give you new millennium predictions. Jim Cramer and Herb Greenberg are back with theirs. Also joining us from THESTREET.COM, editor-in-chief Dave Kansas and Silicon Valley columnist Adam Lashinsky.

OK, Adam, you first. Give us a prediction for the new millennium.

LASHINSKY:

OK, Brenda, we're thinking big picture here for the millennium.

BUTTNER:

Uh-huh.

LASHINSKY:

By the middle of the century, personal computers will be gone, extinct, history. The crucial question for investors is what do the PC companies of today -- think of Dell, Microsoft, etc. -- what do they do, if what I predict is correct?

BUTTNER:

Well, what do you think, Jim. Is Dell capable of adapting to a non-PC environment?

CRAMER:

I don't think so. I'm not on Dell. I've been acquainted for most of my career, but I'm not there. I think that, again, I -- you know, as I mentioned, I like the Nokia -- the mobile world more than I like the fixed world. And I think that Adam's on something.

GREENBERG:

But what is he on to? Is he on to Internet appliances? The so-called direct-to-Internet? We're going to do everything on the Internet? Adam, what are you really talking about here?

LASHINSKY:

Well, yeah, we're talking appliances. We're talking about -- the thing is, Herb, you hate having that big clunky monitor and that big huge CPU on and under your desk. We're just going to get rid of it. I don't agree with Jim though. I think that Michael Dell is, at least, as smart as Jim and me and he's thinking about this too right now. I think Dell will figure out how to sell us the things that we do want to have on our desk.

CRAMER:

Speak for yourself. Adam's like Dell is -- he can reinvent his -- I just think that if I want to play this move, he will reinvent after others have made a lot of money.

BUTTNER:

And Cisco wins on this one too, right?

LASHINSKY:

Yes, they do.

BUTTNER:

OK, Dave, your time for a big picture.

KANSAS:

The New York Stock Exchange is going to go all electronic and there'll be nobody on the floor come the end of the next year, I think.

BUTTNER:

Next year! Wow.

KANSAS:

And they're going to turn it into a museum. It will be just like London and then just one day, boom, everybody's gone. Nobody there.

CRAMER:

Who's going to...

KANSAS:

What's that?

CRAMER:

Who's going to rip off the public?

KANSAS:

I can still find ways to sneak around in there. But it's going to become a...

(CROSSTALK)

LASHINSKY:

I know you guys love this one, but, Dave, I think you're totally wrong. It's going electronic, but we're still going to need a lot of people there just like we need a lot of people to run an online news publication.

KANSAS:

No, no. The London-Hong Kong -- once those things go electronic...

(CROSSTALK)

KANSAS:

... nobody's there. You had the option to stay on the floor if you wanted to, but nobody showed up the first day.

BUTTNER:

Bottom line, what does it mean to us investors?

KANSAS:

Well, I think it's a very nice museum spot for investors because they're going...

BUTTNER:

(Inaudible)

KANSAS:

... look in. They can see...

(CROSSTALK)

GREENBERG:

So, it's going to be less expensive?

BUTTNER:

No, but if we go off all computerized, what does it mean, yeah?

KANSAS:

I think it's better for investors. It's more efficiency. It's going to lead to 24-7 trading.

(CROSSTALK)

KANSAS:

You're doing to see more liquidity. You're already starting to see the trading hours...

CRAMER:

I totally agree with Dave on this, and, boy, has that been a rarity.

BUTTNER:

OK, guys, we've got to take a quick break. But when we come back, our resident bull and bear have their say: Jim Cramer and Herb Greenberg's millennium predictions are next.

BUTTNER:

Welcome back. We're looking ahead with millennium predictions. We've heard from Adam, who said that personal computers will go the way of the dinosaur; and Dave, who thinks that the New York Stock Exchange will become a museum. Now it's your turn, Jim. What do you say?

CRAMER:

OK. There's going to be a revolt of the nondot-coms. We're already seeing it. A little company, Wilmar (ph), this week; a week before Garden Ridge (ph); earlier this week Joskens (ph). These are little companies. They're fed up and they can't take it anymore. They're going private. Management is buying back the company. They will reissue it in some other form, but these companies -- and I'm talking about most companies out there -- are sick and tired of all the money made by the dot-coms. They run profitable enterprises. Their stocks have been ignored and they won't take it anymore. They're going to buy in their stocks.

GREENBERG:

Jim, you're not normally cynical, and what you're suggesting here is a little bit -- no, a lot a bit cynical, because the next part is that they're going to then take these companies public as dot-coms. What is the public doesn't want these companies as dot-coms?

CRAMER:

OK. Wilmar (ph) went private this week. They are the leading supplier of parts -- things to apartment buildings. So, you run an apartment building, you go in and you buy these things. This is B2B like I wouldn't believe. Wilmar.com (ph) comes public next year, six months from now the class-action lawyers have all gone to sleep. This thing skyrockets. Wilmar (ph) as it is was a boring little company.

GREENBERG:

Jim, I agree with you. And I agree with you because these companies have been left in the dust and they're sitting there and, you know what else? All these companies -- too many companies, nobody following them. They've got to do something to get value.

BUTTNER:

What about the big companies that are floundering as well? What about the Cokes and all that?

CRAMER:

Sold to you.

(LAUGHTER)

KANSAS:

Does this stretch all the way?

CRAMER:

We go like this when we're on the trading desk. That means I'm so busy on the phone I can't even say "sell."

(LAUGHTER)

BUTTNER:

OK. Herb?

GREENBERG:

We're going to be talking about biotech stocks. I believe there will be an incredible boom in biotech stocks like we -- more than we saw in 1990 because this time they're for real. There's so much money out there -- so many people are becoming rich by the dot-coms, they're going to be doing what Michael Milken and others have done. Money's going to go into this research. They've got to do it. You've got Bill Gates doing some of this. And I think you're going to start seeing some real development going forward in the next 10 years.

CRAMER:

Herb, I heard you say that these are going to be for real, unlike the biotech boom you covered about 10 years ago. So, we're going to be seeing favorable biotech stock stories from Herb Greenberg?

GREENBERG:

You know, actually, maybe you will, because some of these companies, once they get through phase three trials, mind you, because that's where they all get tripped up, will actually, I think -- this will all come to fruition, Adam.

CRAMER:

You saved me a fortune in the previous downturn. No, I'm not kidding, because I was reading your column when you were in San Francisco, and you knew that it was all a bubble. And a lot of people got caught at the top and some of those managers never recovered. And you know who I'm talking about. But you correctly isolated.

GREENBERG:

And I think right now it's a different time, just like the Internet is not like the biotech boom. And I think these companies have something...

(CROSSTALK)

KANSAS:

And I totally agree with you, Herb, because I think this is going to be driven by the baby boomers' desire to extend their life as much as possible. They'll spend whatever it takes to find whatever -- you probably know about...

GREENBERG:

The time is right and Merck is going to be part of it and it is going to be quite an interesting...

(CROSSTALK)

BUTTNER:

So it's going to be like the Amgens? It's the big ones?

GREENBERG:

It's going to be all of them. It's going to be little companies -- again, companies you've never heard of. What is it, Adam?

LASHINSKY:

When a boom starts, you've got to pile in. You've got to buy a bunch of them, not just four or five. Is that right?

GREENBERG:

That is right because you don't want to get caught by just one. You need a whole basket full of these things. But still, these are risky and again I say phase three trials on these things. That is where you can get tripped up, because some of these companies still will fall apart as they have historically. And these are tricky things to invest in. It's not like investing in...

(CROSSTALK)

CRAMER:

No, but I think you're right. There's big money out there.

BUTTNER:

OK. Well, how about you? Do you want to chime in? Go to our television page on THESTREET.COM web site and let us know what you think, or send us a question, comment, or even your own prediction for the new millennium.

And don't forget that, just like in the 20th century, you can find stories every day on THESTREET.COM Web site that help you make the right choices when investing in the market. This week on the site you'll find a special series called "10 Things You Need To Know To Profit In 2000."

And that does it for us on this special edition of THESTREET.COM. We're back again next week at our regular times, 10 a.m. and 6 p.m. on Saturday, and 10 a.m. on Sunday.

Until then, Happy New Year, and we hope you invest wisely.

END

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