James Cramer Chats on AOL

Palm, Oracle and, yes, AOL -- Cramer covers it all in his latest chat.
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James J. Cramer chatted on AOL Thursday, Mar. 2 at 5 p.m. EST.

PF Trader:

Welcome everyone! Jim Cramer is here and ready to talk stocks!

PF Trader:

Welcome back, Jim.

TSCNYjjc:

Good afternoon everybody. What a wild day and a wild time. I am raring to go with anything you can hit me with!!

Question:

Jim, I'm in SCMR @ $111. What do you think of SCMR? Which wireless stock has greatest growth potential?

TSCNYjjc:

I love Schemer, as we call it in our shop. You know my favorite wireless play, however, is 724 Solutions, but I don't want to slight many of the other great wireless plays out there. This is a big focus of ours, particularly of Matt "Net without Wires" Jacobs.

PF Trader:

How about Oracle's play this week in wireless -- setting up Oracle Mobile for Web phones and PDAs?

TSCNYjjc:

We bought a lot of Oracle today into the weakness. I think there are many, many ways to win with ORCL, mostly because of the great Business 2 Business applications they are bringing to market.

TSCNYjjc:

They are such a good company. We use them at TheStreet.com, too, and they like them.

Question:

Thoughts on PHCM?

TSCNYjjc:

Is this one of the toughest traders? I don't own it, in part because it is often rumored up or down with such vicious temperament that I can't handle it, and I can handle virtually any stock.

Question:

Which is more likely to be visited First: NASDAQ 5500 or 4000?

TSCNYjjc:

I have to tell you that when we were discussing these levels in one of our meetings this morning, NDX 6000 came up, and if that is the case, I don't worry much about 4000! Hope that answers that question.

Question:

Hello JJC. Any idea why CNXT is getting killed while other semis rock? Noticed the selling pressure in spite of Robbie Stephens conference, what am I missing?

TSCNYjjc:

Yes, I am long CNXT. There are concerns that it is losing out on some business to competitors such as ADI and RFMICRO. I was worried at $110 but I am not that concerned down here.

TSCNYjjc:

You know the stock broke down technically today so I think it accumulated more selling pressure. But the company is doing fine. It had too big a run!

Question:

Are we likely to see the Revenge of the Nerds in the next nine months-- with value stocks and the Dow outperforming the NASDAQ for the rest of the year?

TSCNYjjc:

I simply don't see it that way at all. In fact, I did a series of pieces attacking value investing recently and found myself in the crosshairs of a Forbes columnist, David Dreman, who recommended six value plays that he thought would be the NDX this year. The best one was only down 6 points a week later. Pathetic, quite pathetic.

Question:

How many rate increases do you see over the next nine months? And how many are priced into this market?

TSCNYjjc:

I think the stock market is saying that we will see either three or four more hikes. That's what these declines in the bank stocks are saying. Pretty brutal.

TSCNYjjc:

It is vital that we begin to see some softer data if we are ever going to own anything but tech this year. As you know, tech does not respond like the rest of the market because there are no credit scarcities for good tech.

Question:

Jjc, do you have any short position/puts right now?

TSCNYjjc:

We have two short positions but I don't like to mention my shorts because when I do, I get in trouble!!

Question:

Jjc, Is the tape punishing the big retailers (HD, JCP, WMT) for something more than the usually soft first quarter?

TSCNYjjc:

These stocks are going down for two reasons. One is that you should never own retail in the midst of an aggressive Fed tightening.

TSCNYjjc:

They always underperform. The other is that the potential build-out for the Net is going to cost too much. Take a look at Staples, a very fine retailer that got killed because it increased its losses for its dot.com

PF Trader:

OK. Let's spend a moment on COMS/PALM ... PALM finished at 95 1/16 after hitting 165. What's gonna be left in COMS if they spin off the rest (subject to the IRS ruling)?

TSCNYjjc:

I think what is going to be left is precisely what you don't want -- to own a networking company that is getting its head handed to it by Cisco.

TSCNYjjc:

The stuff that is left is slow-growth and competitive, not dissimilar to the stuff Lucent decided to spin off. I am long Cisco. I have no position in COMS.

TSCNYjjc:

I mentioned to our readers that I jettisoned my coms into the market yesterday.

PF Trader:

So with all the speculation going on in COMS -- folks buying on the hope that they get the 1.5 shares of PALM. What happens if the IRS says no to the deal.

TSCNYjjc:

I think that won't be a problem at all. I am more worried about coms being a short here now that Palm is not part of it.

Question:

In your speech published on TheStreet.com yesterday, you made a positive comment about Kana (KANA), although it was not one of your top 10. Could you elaborate on your thoughts about Kana's position as an enabler?

TSCNYjjc:

We use Kana's software to speed our email capabilities at TheStreet.com. It is excellent. By the way, Meg Whitman swears by it at eBay. But I didn't like the fact that they did this giant acquisition a day after they said that they didn't think anything big was in the cards. That hurt the credibility.

Question:

Jjc, any other plays in broadband you like outside of BRCM?

TSCNYjjc:

I know it is a 300 stock but the answer is REDBACK, which is extremely well-run and has a great product line and a smoking business. We are long it.

Question:

Hi Jim...what's your take on DoubleClick right here?

TSCNYjjc:

We decided we couldn't risk owning DoubleClick. Here is why. For the first two years, DoubleClick went around telling everybody on Wall Street that they knew everything about everybody.

TSCNYjjc:

Now they are saying that they don't need to know everything or that they don't know everything. They created a tremendous political problem for themselves. And it isn't going away quickly.

Question:

Jim, I love TheStreet. Yesterday was the first time I have seen you mention InfoSpace. What makes you hot on it?

TSCNYjjc:

We have liked it for some time. Naveen is quite a guy, we love him at our shop. Matt "INSP" Jacobs said he gave the best presentation at Robbie Stephens, and he saw quite a few good ones. We are really into that guy.

Question:

Jimbo, say it ain't so. Are you really getting ready to throw in the towel on AOL. I understand your pain; I mean this merger killed me, but you know that just when you lose your patience, good things happen. You should be buying more!

TSCNYjjc:

I have bad news for you. I haven't sold the stock. I own it. I am just taking pain, sheer, unadulterated pain. Like do you remember that scene in "Rocky III" with Clubber Lang (Mr. T), where he says his forecast for Rocky was "pain?" I have that same forecast for AOL shareholders. Sorry.

Question:

Jjc, any sectors you think are overdone/valued in this tape?

TSCNYjjc:

Yes, I continue to think that the Web consultants are selling at much too high multiples. I have written about that endlessly, as has my colleague, and fellow "love to hate" character, Herb Greenberg. Herb's stuff on this segment has been fabulous.

PF Trader:

Agreed. These consulting firms just can't scale their businesses as fast as a software company that can "make copies" of a product.

Question:

Jim, what are you reading these days?

TSCNYjjc:

Right now, I am reading Henry Kaufman's autobiography for a review for the Los Angeles Times. I don't really care for it. However, I just finished "When Titans Clash" by Glantz, about the Russian drive to Berlin in '43 to '45 and it was EXCELLENT!

TSCNYjjc:

And I just got the two John Ericson books on the Eastern Front and "On the Road to Stalingrad," which is a book by a female Russian machine gunner. You know I can't read enough about Stalingrad because, had it gone the other way, the world would have been totally different.

Question:

Hello Jim, what are your thoughts on the chip industry? How

Question:

about LSI?

TSCNYjjc:

I was the $66 bid for 35,000 at the end of the day. I like this stock very much and would not be surprised it if went to II launches this weekend.

Question:

Jim - Did Matt "B2BeFree" Jacobs catch the FFIV presentation at the Robbie Stephens conference? Any thought on why the stock is stuck after a great quarter?

TSCNYjjc:

Yeah, he got suckered into the old FFIVE maw, as did others, and when I heard about it, I executed him, I mean, it. Matt will never be known as Gadzoox Jacobs or FFive Jacobs, although he was once known as Class Seven Switch Jacobs.

Question:

Do you have any particular feelings about Niku? It has gone up tremendously after opening on Tuesday.

TSCNYjjc:

What a stock. We held on to a little of it.

Question:

Jim, What's your view on EXDS?

TSCNYjjc:

The Exoduster! We love it. Bunch of managers going to go see them tomorrow. It got hit today on a story that EDS might move into their space. Everybody always threatens to move into their space but nobody has laid a glove on these guys. And we like EDS!!

Question:

Corning - value play instead of JDSU?

TSCNYjjc:

Just Don't Sell Us? How dare you put Corning in the same question as Just Don't Sell Us. The Canadian superstar!! And I don't mean to knock NT, which I also love.

Question:

What do you think about Commerce One?

TSCNYjjc:

We think Commerce One is a winner.

Question:

Do you think it is time to take some profits in the tech sector in anticipation of some kind of temporary pullback on the NASDAQ?

TSCNYjjc:

Let's get one thing straight. There are bulls, there are bears and there are pigs. Pigs get slaughtered. I think you should, if you haven't, take something off the table. Tomorrow. Any time.

TSCNYjjc:

The goal is to have profits, not to have illusive profits. You can't let everything ride!!

Question:

When will Yahoo! start participating in the rally? Are you a buyer now?

TSCNYjjc:

No, I am not a buyer, I am an owner. That is hard enough. We almost sold our Portal Software because it had the word portal in it, which is now the kiss of death on Wall Street.

Question:

What do you think of ICGE (Internet Capital Group)?

TSCNYjjc:

I think that you have to be long this stock ahead of the GE meeting next week and ahead of the ICGE day, which is going to be very bullish.

Question:

Hi Jim. What would be your biotech faves and do you still believe there's more room to the upside?

TSCNYjjc:

You came to the right place. We are going to conduct our Biotech draft tomorrow. I have Melissa "Genome" Kasper as my opponent, and Genome is hot as a pistol.

Question:

Love TheStreet but what's with Herb lately? He's actually been upbeat!

TSCNYjjc:

I know, it scares me to see him this positive. Gives me the creeps. I like Herb skeptical and dry, not all kissy and wet!!

PF Trader:

Me too!

PF Trader:

It's just not right when he's a bull.

Question:

The "Old Economy" companies produce the things that are sold on the Internet. Why aren't they a good investment at this time?

TSCNYjjc:

I think they will be, but they are hostage to the Fed's tightening. Actually, if you look at how stocks do in a tightening, these producers do quite poorly. That's just the way it is.

Question:

Thank you for the opportunity. I enjoy your colorful view on the market . . . Do you have an opinion on IOM lately? Is click an interesting product? Is Albertson going to help the company re-establish a leadership in the industry? Thank you.

TSCNYjjc:

When IOMEGA was at $35, I read an article by Herb Greenberg that told me it was going much lower. It was such a prescient article that I blew the stock out and I said, if I ever do a newspaper, we gotta hire Herb Greenberg. He can make you a fortune in the strangest places.

PF Trader:

IOM announced they've shipped 200 million 250MB-disk units. Huge!

Question:

What sectors do you view with the greatest growth potential over the next couple of years?

TSCNYjjc:

Wireless Internet, cell phones, B2B.

Question:

Are you familiar with the stock Ariba? It is supposed to split? Should I buy?

TSCNYjjc:

I just sold a little at $315. I am taking a small profit, but I think the stock goes higher. It just split 2 for 1 and it jumped 20 points on that, which I thought was excessive. Call me old-fashioned.

Question:

Why are we seeing such a systematic disconnect of the Dow and the Nasdaq?

TSCNYjjc:

Because the Dow represents mostly older nontech companies, including many financial companies that are hurt by a Fed tightening, where the NDX represents younger companies that can access the equity markets for capital. They don't have a credit crunch issue and they grow faster than the Fed can brake the economy.

Question:

At what point should we be concerned about Cisco's market cap?

TSCNYjjc:

After it passes Microsoft's market cap.

Question:

Do you see a MSFT break up?

TSCNYjjc:

No, I think they will reach a settlement that is not that painful for shareholders. I remain very long Mister Softee.

Question:

I read an article in TheStreet.com about how you were waiting to get into biotechs when the growth subsided a little. How do you feel about this now?

TSCNYjjc:

I don't want the growth to subside; I want the stocks to subside. We had a couple of down days, so we are jumping in.

Question:

What is your current opinion on Global Crossing and VerticalNet?

TSCNYjjc:

I am long neither. Global just ran too much. I wish I had bought Vertical today, but I own a ton of Ariba.

Question:

What age do you think kids should start to learn about the stock market and get into buying, selling, and trading "fake" stocks? And do you think it's a good idea?

TSCNYjjc:

What a great question! First, I learned in the second grade. I made everybody in my fifth-grade class play a stock market game! But I think I rushed it a bit.

TSCNYjjc:

I think that kids should learn the value of money before they learn to invest. As soon as my kids take a regular part-time job like I had or my wife had -- busing tables, McDonald's, etc., -- then it will be time.