To combat this problem, Cramer says Yahoo! can continue to buy back stock, which has worked for the Internet company and worked for IBM (IBM) for a very long time.
Cramer says Yahoo! could also use the proceeds from the Alibaba (BABA) IPO to start to roll up a lot of the companies in the Internet space, such as Yelp (YELP) , GrubHub (GRUB) , TripAdvisor (TRIP) or HomeAway (AWAY) to build one-stop shopping for local needs for everybody who needs to do a transaction.
Cramer says Yahoo! is in the catbird seat, the valuations have come down, and the company's holdings in Alibaba have made it richer than it knows what to do with the money. Therefore, Cramer thinks it is better for Yahoo! to take the Alibaba proceeds and start buying, in a tax-friendly way, the companies that can help Yahoo! have great growth again.
Cramer's top acquisition pick for Yahoo! is Twitter (TWTR) , which he calls "an under-managed company with a fabulous brand."YHOO data by YCharts