'RealMoney' Radio Recap: Not Everyone's Gone to the Movies

The movie play is on in-home wireless and the equipment makers that enable it. Also, earnings primer.
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Many of you may have gone to the movies and, after all the expense and hassle of overpriced food, tickets and rude fellow theatergoers, it may not come as a surprise to you that movie attendance is at its lowest since 1997, Jim Cramer told

"RealMoney" radio show listeners Monday.

Movie owners have something to worry about, particularly with competition from DVD sales, and newer and better home theater systems, he said.

"But they're not worried. They're bullish," said Cramer, citing a story in

USA Today

in which theater owners believe that because going to the movies is a unique experience, theaters are here to stay.

"When I see that, I see one thing. I see the fundamentals deteriorating, despite what the theater owners say," he said.

Just because movie theater owners are saying that there aren't problems, don't go out and buy

Regal Entertainment

(RGC)

and

Carmike Cinemas

(CKEC)

, said Cramer.

Only the rare manager will admit when there really are problems, and Cramer believes that these stocks are riddled with problems.

Pioneer Telephone Cooperative

, a small Oklahoma-based company, is among the first to put equipment in homes that allow consumers to wirelessly receive television service, Cramer said, calling this one of the most exciting developments in the ongoing cable/telecom wars.

Pioneer enables companies to provide service without having to go out to the subscriber's house to do the wiring, and this could make cable companies very vulnerable if consumers can get their channels without a hard line, he added.

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Ruckus Wireless

will supply wireless service to Pioneer, but Cramer said that the way to make money is to buy stock in the equipment makers that Ruckus uses.

Those companies are

Broadcom

, "which makes all the parts of the wireless infrastructure," and

Marvell Tech

(MRVL) - Get Report

, which provides wireless technology for controllers on game consoles.

These companies make the key parts that allow Ruckus to equip your house with wireless technology, he said. And even though the stocks are up a lot, Cramer said they could be worth buying because they are the

Intel

(INTC) - Get Report

and

Advanced Micro Devices

(AMD) - Get Report

of the next generation."

The War Years

Three years ago the U.S. attacked Iraq, and since that opening strike, the war effort has gone through many gains and setbacks, Cramer said. And whether we support or question the war effort, we need to understand how Wall Street responded because there's money to be made.

In the lead up to and beginning of the war, defense stocks all rose, he said. But at "mission accomplished," when President Bush announced from an aircraft carrier that the major combat was over, defense stocks went down and stayed down as the system believed that the war had been won.

Then we had that difficult battle at Fallujah, when it was clear that the insurgents were stronger than we had thought and that we had to use real military might to defeat them, Cramer said.

Ever since then, defense stocks have gone up because Fallujah signaled the start of a longer war.

When war is a permanent state for the near- and medium-term future, Cramer said that the following defense plays would continue to rally:

Lockheed Martin

(LMT) - Get Report

,

Boeing

(BA) - Get Report

,

General Dynamics

(GD) - Get Report

,

Northrop Grumman

(NOC) - Get Report

,

Raytheon

(RTN) - Get Report

and

L3 Communications

(LLL) - Get Report

.

Cramer owns Boeing for his

ActionAlerts PLUS charitable trust.

Moreover, huge companies such as Northrop and Lockheed are general contractors that farm out work to smaller companies, he said. So even though a contract may not necessarily move large companies' stock, it will positively affect the companies that they hire, including

CACI International

(CAI) - Get Report

and

DRS Technologies

(DRS)

.

How to Read a Report Card

Cramer told listeners that it's essential to pay close attention to a company's quarterly report, which all publicly traded companies must do.

It's like the company is issuing its own report card, so you have to be a bit skeptical, Cramer said. But earnings season is where the big moves occur.

When I talk about homework and fundamentals, the only real insight is in these quarterly reports and conference calls, he added. And this is what Cramer said to be looking and listening for:

Did the company beat Street estimates? If everyone was looking for the company to report 10 cents a share, did it do 11 cents? "The Street" means Wall Street, specifically, the large brokerage houses.

By earnings, he means the company's profit. And earnings and earnings estimates are always expressed in terms of earnings per share, or the company's profit divided by the number of shares outstanding.

What was the company's guidance like? This can be problematic because management wants to be upbeat. But they hate being sued, so they can't be too upbeat. But sometimes they will even give guidance that is negative, Cramer said.

Was business strong or weak? What was the tone like? Did the company make it sound like the environment had been bad?

Did the company take market share from its competitors?

What was growth like? Did the company say that sales and earnings were growing faster than before, the same as before or slower than before?

When a company says that growth is accelerated, the stock tends to go up. When it is flat, the stock tends to do little. And when it is down, the stock tends to take a hit.

These questions are answered by the conference call, Cramer said, which is made available each quarter on the company's Web site.

Cramer's Callers

Cramer told a caller not to sell

Vodafone

(VOD) - Get Report

. "It is integral to a world that I am completely and utterly addicted to right now ... and that is telecom," he said.

The company spent a fortune on building the most advanced wireless communications network in the world and is a 49% owner of

Verizon Wireless

(VZ) - Get Report

, he said. But everything fell apart six years ago when no cell-phone equipment makers made cell phones that could take advantage of everything Vodafone had to offer.

Now, phones do have the capabilities to use that network, and Cramer said that after surviving this tremendous downturn, the company is poised to be at the forefront of a telecom bull market.

He told another caller that he would also hold on to

Diebold

(DBD) - Get Report

because it makes voting machines and ATMs, two business streams that should grow.

However, Cramer also said that Diebold has had problems with execution, which is why the stock is down 15 points from its 52-week high.

Even though he gives the company "the benefit of the doubt," because there seems to be a fundamental story that should help the stock, he also worries every time Diebold reports earnings that it will have missed estimates.

Finally, a 28-year-old cost estimator sent an e-mail to Cramer saying that he wants to switch careers and work in the financial sector. He wanted Cramer's advice on the pros and cons of different fields, including investment banking, selling stocks or working in personal finance.

Cramer said that the best thing to do is to get into a training program at a major firm like

Morgan Stanley

(MS) - Get Report

,

Bear Stearns

(BSC)

,

Goldman Sachs

(GS) - Get Report

,

Merrill Lynch

(MER)

or

Prudential

(PRU) - Get Report

.

He also recommended regional players including

Raymond James

(RJF) - Get Report

and

Piper Jaffray

(PJC) - Get Report

.

"They teach you what you need to know," he said. "This is a humbling business."

Cramer said that the most money is in bond trading, but that he loves trading stocks, so he's partial to working in equities.

He said that the bulk of investment banking work is tied up in initial public offerings.

While it's a good way to make a lot of money, mergers and acquisitions work is "around the clock," Cramer warned. It will take a tremendous toll on your personal life, he said, whereas sales and trading is finite because it ends when the market closes at 4 pm ET.

Cramer doesn't believe that it pays to go to a commercial bank. A good goal could be to run your own business or to work for a money management firm, he said.

At the time of publication, Cramer was long Boeing.

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

Action Alerts PLUS. While he cannot provide personalized investment advice or recommendations, he invites you to send comments on his column by

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