Separating Good Tech From Bad Tech

PCs and telcos will prove again that not all tech is created equal.
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Editor's Note: Jim Cramer's column runs exclusively on RealMoney.com; this is a special free look at his column. For a free trial subscription to RealMoney.com and Jim Cramer five days a week, click here. This article was published first on RealMoney on Oct. 31.

Normally I would be screaming at you to reposition (sell) into strength your ne'er-do-well technology stocks.

Not this time. I think this rally might have some legs here as we get to November and to another

Fed

meeting, where I expect another cut in the fed funds rate. That could give us a week's worth of rally.

More important, I want to be very specific as to which tech is right and which tech is wrong. I think PCs are bottoming and that

Microsoft's

(MSFT) - Get Report

Windows XP will surprise people and sell well.

On the other hand, I would be wary as ever, maybe more than ever, about the technology that goes into telcos. The budgets of telecom companies are going down, and down big. In a few days you will have to, once again, sell whatever you may have left in that segment, as I think it will be another long year of losses for that group. One possible idea: Hold these until

Cisco

(CSCO) - Get Report

reports, which I think will be an OK number, and then unload them.

Why am I more certain of this than ever? Have you listened to any of these conference calls from the telcos? End customers aren't buying high-end telecom stuff with any gusto, and many of these one-dollar telcos are about to go belly up. And most important, the natural gas pipeline companies have drastically cut back their plans to be telecom companies because of their own funding problems.

Take your time with tech. Higher prices await and then you can go.

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. At the time of publication, Cramer was long Cisco. While he cannot provide personalized investment advice or recommendations, he invites you to send comments on his column to

jjcletters@thestreet.com.