Watch Out Amazon, BKS.com's on Its Way

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Can you buy puts on

Amazon.com

(AMZN) - Get Report

and make money? I have been loath to play any Internet name to the short side because I am a true believer. Hence

TheStreet.com

. But I nibbled on the October put paper Friday because of the

Barnes & Noble

(BKS) - Get Report

deal. Here's why.

I love Amazon.com. I haven't been to a bookstore since I got my account. I think I will always love Amazon.com. I have never been confused by the notion that Amazon.com has a giant market cap. It is a loved stock and it cannot be borrowed. (See my

piece last time on what this means and why I can't short Amazon common.) If you are reading this piece at night, I have probably just been to Amazon and would have joined you for a virtual cup of coffee in the military history aisle.

But this Barnes & Noble initial public offering will change the Amazon stock for the worse, not the better. Because the BKS people are crafty and know the game. When the roadshow for this IPO starts, even Amazon holders might be panicked into selling. Here's why.

First, Barnes & Noble will visit 12 cities and speak online about how great Amazon is while speaking off line about what a loser Amazon.com is. You don't want someone out there going around the globe knocking your stock. But it will happen.

Second, BKS has no desire to hurt itself with an online business, but it wants to CRUSH Amazon, as any good competitor would. By off-loading BKS.com it will have a vehicle that can really put it to Amazon on a price basis with the expected losses being broken out to its BKS.com sub. It is almost in BKS' interest for BKS.com to do poorly. In that it can hurt Amazon, which is taking huge online market share, without damaging parent BKS' buzz.

Third, BKS.com's IPO and subsequent stock will be like a giant ad fest for BKS.com. I suspect that anybody who does not know BKS.com will have heard of it by the time this deal comes public.

Finally, the creation of BKS.com might be just big enough to alleviate some of the short squeezes are occurring in Net stocks. If you go back and read my

piece about how there are not enough Net stocks, I predicted that the bankers would have to create a ton of new equities before you could see a top in this group. Looks like the bankers are listening.

Can you own BKS.com for the long haul? Tough question. These IPO spinouts of retailers from other retailers tend to be real dogs in the long run. Most recently we have been hit by the ugly

Carmax

(KMX) - Get Report

stick. But price it right and anything can work. I made good money on the

Kmart

(KM)

spinouts and got takeovers when Kmart ran into such trouble that it had to raise cash.

*****

Random musings:

I am hearing that our customer service department is finally gearing up to sell hats and T-shirts for

TheStreet.com

. Boy is that good news. Nothing would get the word out like that kind of sponsorship. And yes, the word does matter. Not because

Fortune

says we are about to go public. Where did that come from, Andy Serwer? But because we are proud and want more people to know about us ...

Can you believe

Investor's Business Daily

mentioned us? Shocked me when they mentioned our online survey. Didn't think those boys read the Net! ... Possible bottom in the savings and loan market? Lot of worries out there about a new wave of refinancings, but I am not buying it. I think that the refinancing headache for savings and loans is peaking. But that doesn't mean the stocks are troughing. This could be a very difficult quarter for these guys and I don't expect any relief until these numbers are reported. But I keep chipping away at those with intrinsic value, like some of the beaten-down New York thrifts ...

Off-topic department -- let's get rid of the preseason. These injuries are killing my favorite clubs, especially when the

Jints

lose Jason Sehorn. I am an

Eagles

fan, but you have to love that guy. What hustle.

James J. Cramer is manager of a hedge fund and co-chairman of TheStreet.com.

At the time of publication his fund has a small put position in Amazon.com, although positions can change at any time. Cramer notes that since the stock can't be borrowed, any attempt to short common shares at this point would be considered an "illegal borrow." 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 by sending a letter to TheStreet.com at

letters@thestreet.com.