Using Market Caps Wisely - TheStreet

Use that currency, use that currency! Akamai (AKAM) - Get Report and Kana (KANA) (named after the guy's dog -- I kid you not) both made billion-dollar buys today to solidify their positions in their respective markets.

This is exactly what is supposed to happen. We give these companies these valuations so they can be consolidators. We will take the market caps away if they aren't used.

Join the discussion on

TSC

Message Boards. This whole process of creating billion-dollar companies overnight is really just a game of placing bets on the future. We take Akamai and Kana to where they are because if they execute and acquire, they win. If they don't acquire and execute poorly, they lose.

We don't know which companies will do that duo correctly, so we bet on a bunch of them and slowly weed out the losers. It worked with

Microsoft

(MSFT) - Get Report

,

Lotus

,

Ashton-Tate

and

Borland

. It worked with

Cisco

(CSCO) - Get Report

,

Synoptix

,

Wellfleet

and

3Com

(COMS)

.

What does work mean? It means that if you bought the basket of these software companies or these networkers and held on, the winner made you a ton more money than you lost on the losers.

This morning we took a giant step toward figuring out who is going to win in the smart email and high-speed Web industry segments.

And it looks like Akamai and Kana "understand" their market caps better than most.

Random musings:

If you didn't check in this weekend, there was a good

debate on writing about small-caps on the site. ... Was around my town of Summit quite a bit on Saturday and Sunday and was struck by how everybody had out his

AT&T

(T) - Get Report

Wireless Proxy that you got in Saturday's mail. Really good, well-written document.

James J. Cramer is manager of a hedge fund and co-founder of TheStreet.com. At time of publication, his fund was long Kana, Microsoft, Cisco and 3Com. His fund often buys and sells securities that are the subject of his columns, both before and after the columns are published, and the positions that his fund takes may change at any time. Under no circumstances does the information in this column represent a recommendation to buy or sell stocks. 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 invites you to comment on his column at

jjcletters@thestreet.com.