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RealMoney Radio: Microsoft's Tangled Web

Cramer says the company's online move needs to include buying Yahoo!.

"For a lot of investors,

Microsoft

(MSFT) - Get Report

represents a wealthy company that has a vital product; in this case, an operating system," Jim Cramer told his

TST Recommends

"RealMoney" radio show Friday.

But consider the following: Even though Microsoft has enormous financial and creative resources, Cramer said, over the past few days it said it will spend billions to explore ventures outside of its Windows and Vista operating systems

He said that the company, which he owns for his

ActionAlerts PLUS charitable trust portfolio, is a very profitable company. But it has never been successful outside of its core products, i.e. its operating systems business.

Microsoft knows that online advertising is the way of the future, but its MSN site is not loved, Cramer said.

Google

(GOOG) - Get Report

and

Yahoo!

(YHOO)

dominate the Web, he said.

"If Microsoft is serious about wanting to be in this business, it will have to buy Yahoo!," Cramer added. He also owns Yahoo! for

ActionAlerts PLUS. Otherwise, he said that the move to online will be "another failed attempt to be big away from Windows."

He told listeners that the move to beef up its MSN division will not make Microsoft a decent stock to own.

Cramer said that he has been negative on

eBay

(EBAY) - Get Report

for a long time, and that now people are giving up on the company left and right.

The company owns PayPal and Skype, a VoIP (voice over Internet protocol) services company. The stock is at a 52-week low, and analysts are recognizing that it's not growing the way it used to.

Cramer said that a downgrade is likely to come in a few days, and that when that happens and the stock falls, it's time to go in and buy.

eBay's long-term growth is 27%, but the company sells at only 1 times its growth rate, he said. There is room for the stock to go higher, but he would not buy the stock until after it's downgraded.

To see the most recent edition of The RealMoney Radio Recap in its entirety, please click here. This recap is published every day around 3 p.m. ET.

At the time of publication, Cramer was long Microsoft and Yahoo!.

James J. Cramer is a director and co-founder of TheStreet.com. He contributes daily market commentary for TheStreet.com's sites and serves as an adviser to the company's CEO. Outside contributing columnists for TheStreet.com and RealMoney.com, including Cramer, may, from time to time, write about stocks in which they have a position. In such cases, appropriate disclosure is made. To see his personal portfolio and find out what trades Cramer will make before he makes them, sign up for

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