nonstop, best start since 1997. there is nothing to be alarmed about. this one a little unconventional, everybody, because it starts on wednesday. it starts out of order. when facebook is expected to file to come public. all day people have been asking me on that@a jim cramer twitter thing. how do we play? let me give you a ipo 101 please. you can't possibly know how to play it until you know the terms and the perspective price. we can't be stupid about this. if facebook becomes public at about 70 billion, probably tell you to buy it. priced over 10 billion, probably won't make all that much money. probably should blow out of it as fast as you can. with a fantastic business model, tons of revenue, facebook deserves to have a gigantic valuation. don't be thrown off when people say hold it, this company is going to be worth more than honeywell or home depot or ford. who cares? it's growing really fast and making a boatload of money. this isn't just a revenue story like so many other dot comes. don't be thrown off the scent of what could end up being a real home run. on monday afternoon, we hear from enbridge. i love these sleepy companies that make you a ton of money. steady cash flows, no government interference. what is not to like about enbridge? we have wracked up some tremendous gains buying these high yielding limited partnerships since the show began. and eep fits that bill perfectly. many people are asking me if kinder morgan partners, kmp is a buy. i'm really nervous, i'm really nervous. the answer is yes, absolutely. you don't have to buy it all right now because it's an $80 stock. you go down a couple bucks. but the only pipeline companies to avoid are the ones i've told you to sell and sell and sell again like suburban propane and today's huge disappointment energy. which shed over 5.22. that's not going to last, all right? tuesday morning chip maker arm holdings reports. now we know arm, right? that's the competitive intel. can't figure out which one is going to triumph in the battle of the smartphone semiconductors? why not listen to arm and then go by some kla tencor. the biggest beneficiary between the arms race of the two. reported last night it was the best tech quarter, save apple. after the close we have amazon.com. talk about a battleground stock. netflix had a remarkable period. jeff bezos is spending to win. if amazon pulls a netflix and actually delivers an upside surprise because the holiday season was so strong, you're going to get a phenomenal breakout. however, bezos might be spending more than anyone thought. the best course is just to wait and see if you can buy it on spending-related weakness after the quarter. otherwise maybe stay away altogether. i know a lot of people doing it with options, doing it with call options. i'm not going recommend that because if it goes down, people are going to say jim, why didn't you just tell us to not be in. all i'm telling you is if the company beats the quarter, the stock is going to go up 50 points, okay. if. wednesday's real busy. other than facebook, which we put over here, because, you know, i don't know. anyway, other than facebook's filing, we'll hear from whirlpool, okay, in the morning. has the nation housing come back this we heard from dr horton, finally begun to impact whirlpool positively? the last quarter i had to hold my nose the whole time. wow, this is really bad. although i like whirlpool and would have climbed in it after i finished reading that quarter. anyway, i believe without trade relief from dumping by overseas competitors is going to be another bad one. then chipotle reports. and as much as i love this company, you know i do, right? come on, we've been in it forever, the stock did hit an all-time high today. i have to hear what they say about new expansion as well as the second concept, the asian noodle concept. if there is a restaurant company is going to surprise the upside in a market where people seemed to have turned on the group -- remember brinker not so good, mcdonald's down, starbucks down, chipotle will be the standout. even more than panera. we got in before the big ramp. this is one of our favorite high growth retailers along with ross stores and costco and tjx. yeah, costco is okay here. why do i know that? because this is a costco tie, made in italy. can you believe this? does this not look like a ferragamo? do you think it cost as much as a ferr -- anyway. and while we're talking about retail, can i make it abundantly clear that i would sell jcpenney at these levels. i said it would take 18 months, not 18 minutes. this stock is way ahead of itself. core labs reports wednesday afternoon. remember how we play this one? it's almost automatic. it always sells off. it almost always sells off after the quarter and then begins a sustained move higher after it gets completely hammered, sometimes by 10%. i say take profits here and then get ready to buy it the next day when sellers flood into the market. same goes for cramer fav aller again on thursday. here is a that seems to report great earnings and sell off. i suggest you adopt a core lab style trading approach around this. get ready after it gets hammered on what i regard as being a faux disappointment. it happens to be the best acting pharma out there other than maybe a celgene. yesterday eaton's sandy culver on the show says the truck sales. it's extraordinarily strong. my worry is it may be in cummings' stock, so i'm going to bet that cummings stock gets hit no matter what it says. and i would do if i were at home what my charitable trust did and take profits ahead of the quarter. then there is dow chemical. this one i'm really curious, making a lot of calls on today. it's a big one. the chemical companies are on fire right now. a lot of takeovers in the group, in part because of a dramatic decline in natural gas, their core feed stock. so i bet dow will deliver a very strong bottom line, although top line, the revenues could be hurt by europe. 2/3 the stock gets hit by some extraneous market news ahead of this report, i'm going to come in here on thursday night and tell you, or friday morning on "squawk on the street." friday morning there is american axle. now i've made it clear that the way to play the auto rebound is not with the automakers. witness ford, right? more on that later. but with the parts makers because we care about the automobile. axl is the first of this group to report. if we're going to build more than 14 million cars this year in this country, something i consider quite doable, then axl should be a real good spec go into the quarter. and we'll hear from clorox, okay? see that in there? it's one of my absolute favorite companies. clorox is another one with a tendency to sell off after reports. it drives me crazy that it does ever time. mr. knauss knows how i feel. it isn't necessarily what we get out of a clorox. i think it is cheap, the company is terrific. but a dividend booster. i hope it come downs so you can do some buying. although the dividend is so outsized, it would shock me to see the stock down more than a couple percent, particularly when procter & gamble barely fell today despite one more disappointing quarter. and i'm getting upset by proctor. beyond earnings, we know caterpillar says look out. europe will be turning up by the end of the year. i think probably too aggressive. but the german manufacturing index, we get a reengd that wednesday. i think it's going to go a long way toward converting the skeptics if caterpillar is right. friday we get the january employment report. i think we're going to see a continuation of some good payroll numbers thanks to the strengthenened auto bill, aerospace, retail markets, and oil. okay? the only two energies that are still laying people off in energies are banks and state governments. i bet this employment report will be another clarion call for you the sell your bonds and move into higher yielding stocks. here is bottom line. keep your eyes open next week because there is a lot of earnings to keep track of. unlike so much of last year when europe was in control, results actually matter now. to me that's plain wonderful. john in my home state of new jersey. >> caller: super boo-yah, jim cramer. >> the giants, the giants are going to win. go ahead. >> caller: i'm happy than. my question is about 113 communications. first they had a reverse split to 28. then they dropped to 40% to trade between 17 and 19. >> then defense department budget cuts will likely hurt them further. jim, is this really a dollar stock headed towards becoming a penny stock? >> johnny, this is lvlt. it's not really a defense play, it's a play on like alkamai. i don't think it's doing that well. i want to know if it's cash flow positive at some point. that's what i'm looking for. next week a lot of earnings and this year i'm actually looking forward to them. they matter. europe isn't in control. and you know what? that is real promising. "mad money" will be right back after the break. >> coming up, rough road. ford's stock is down over 30% in the past year. but it surged about 15% in january. so is now the time to take this one for a ride? or could it stall out again? and then later, prognosis for profits. all this week, cramer's unveiling his medical breakthrough stocks that could be set to break out. investors have been wary of this company because of its ties to europe. but could their loss become your gain? plus, apple have versus apple have-not. apple's products have been dominating the mobile arena. cramer is seeing how one leading touch technology supplier is helping its competitors to try and grab market share when he talks to the ceo of cypress semi, all coming up next on "mad money." >> miss out on some "mad money"? get your "mad money" text alert today. text mm to 26221. to get cramer right on your phone. for more info, visit madmoney.cnbc.com or give us a call at 1-800-743-cnbc. but when she got asthma, all i could do was worry ! specialists, lots of doctors, lots of advice... and my hands were full. i couldn't sort through it all. with unitedhealthcare, it's different. we have access to great specialists, and our pediatrician gets all the information. everyone works as a team. and i only need to talk to one person about her care. we're more than 78,000 people looking out for 70 million americans. that's health in numbers. unitedhealthcare. laces? really? slip-on's the way to go. more people do that, security would be like -- there's no charge for the bag. thanks. i know a quiet little place where we can get some work done. there's a three-prong plug. i have club passes. [ male announcer ] now there's a mileage card that offers special perks on united, like a free checked bag, united club passes, and priority boarding. thanks. ♪ okay. what's your secret? ♪ [ male announcer ] the new united mileageplus explorer card. get it and you're in. ♪ it's a girl my lord in a flatbed ford ♪ >> can ford ever get it together? i know a lot of people are thinking this company has gone from being the comeback kid to a serial underperformer, and this story is finished, kaput, never coming back. i get that. the stock was hammered today, selling down 53 cents to close 12:21. disappointing. i, though, think it is wrong to give up on ford as frustrating as i know it is to own it. in fact, i think that what happened here is that the company simply overpromised and vastly underdelivered. here is why. first the company should have preannounced the shortfall as soon as the year was over, or even before it. last week of december. as the book of business declined sharply in europe because of the debt crisis, and in asia because of thai flooding, my regarding this of a nickel on a 25-cent basis which is what they were looking for, pretty devastating, and worthy of a call-out before the actual day of earnings. that's a material miss that management should have flagged immediately. secondly, while the thai flooding was unforeseeable, the whole world was expecting a decline in europe. the company should have been a little more prescient this should occur. third, the company got beat up on commodity increases that were pretty murderous, increases that could not be passed on to the consumer. but those too could have been flagged because those commodity markets are public and transparent in pricing. finally, while the company sent some -- the company did send some missed signals out. while beginning to build a fabulous balance sheet, the company sent a signal this things are cooking when it boosted the dividend last quarter. and that threw a lot of people off. i would have waited until this quarter was announced to put that dividend boost through. i know, i know. this is going to sound like optics, okay. but i think the biggest issue ford faces is tempering the enthusiasm, curbing it of its supporters by guiding down sharply to a level that is more realistic and can at last be beaten. in that sense, ford reminds me a little of serial underperformer alcoa, another company that does not restrain the bulls. but instead lets them run loose to the detriment of the share price. when you know the commodity costs haven't come down going into 2012, when you know that europe is getting increasingly gloomy, this is the chance to reset the bar and tell analysts to take estimates down to a level that is far below what the company can earn, far below what the company in its optimistic state can earn. it's just almost impossible given the headwinds ford has to have in front of it that can even come near making what it was able to make last year. so now is the time for ford to say until europe improves, we are not going to be able to do as well as we like, and your numbers are too high. hey, if it turns out that it beats 2011, so be it. but they didn't do that today. so i think you got a real dead money stock on your hands. too low to sell, but too high to buy. until we get some realism in the earnings estimates and in the numbers from ford, we're going to continue to recommend buying the u.s. part makers. as ford confirmed the domestic build could be as high as 14.5 million cars. a nice increase and only secondarily will rerecommend the motor companies, only if they come down. here is the bottom line. sure, it wasn't a good quarter. but what made it worse was ford's inability to tell the story in anything other than a rosy fashion. ford's al mulally hasn't yet figured out how to play u pod which is overpromising and underdelivering. let's go to stafford in colorado, please. stafford? >> caller: hey, jim. how are you today? >> not bad, chief. what is going on? >> caller: hey, my question is regarding ups. i know their accounting practices are going to affect price of the shares when they report on tuesday. i was wondering if i should buy, sell, or hold. >> all right. ups, we -- i don't like to speak in a forked tongue. i owned the stock, charitable trust, took a profit. i think it is good, other values have taken away from it. united parcel has been a stock that has sold off after it reports. i don't know if it's going to be any different this time. i don't think you need a full position going into the quarter is the way i would look at it. let's go to jimmy in virginia, please. jimmy? >> caller: hey, jim, nice northern virginia george mason boo-yah. >> i'm looking for a march madness move from you boo-yah. >> caller: hey, jim, with added pressure for government to cut its deficit, what the likelihood the treasury will sell off shares in part-funded companies such as gm, which the owner reported a 32% stake in? how is this going to affect gm and the auto industry as a whole? >> well, i think tim masset who came on the show, in charge of t.a.r.p. disposals made it very clear he is not going to sell the next tranche, the next tranche before where the government sold the ipl. however, if a republican comes in, i think you're going to be real nervous and gm is going to get blown out the door probably the day after the inauguration. all right. i'm going to get me a car. i'll be headed down. down will be ford's story until they learn how to play u pod. they have to start underpromising and overdelivering instead of overpromising and underdelivering. stay with cramer. we're america's natural gas and here's what we did today: supported nearly 3 million steady jobs across our country... ... scientists, technicians, engineers, machinists... ... adding nearly 400 billion dollars to our economy... we're at work providing power to almost a quarter of our homes and businesses... ... and giving us cleaner rides to work and school... and tomorrow, we could do even more. cleaner, domestic, abundant and creating jobs now. we're america's natural gas. the smarter power, today. learn more at anga.us. ♪ ( whirring and crackling sounds ) man: assembly lines that fix themselves. the most innovative companies are doing things they never could before, by building on the cisco intelligent network. and waiting in line. i don't have to leave my desk and get up and go to the post office anymore. 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[ male announcer ] get a 4-week trial plus $100 in extras including postage and a digital scale. go to stamps.com/tv and never go to the post office again. every day this week i have been explaining one of the biggest medical miracles in recent history, namely how the heck the drug stock, particularly the big pharma names have managed to return from the dead and rebound like crazy. >> hallelujah! >> despite the fact they're all in the middle of losing huge amounts of business as some of the biggest drugs go generic we know they make much less on them. for the last few years the only story worth telling in big pharma was the patent expiration earnings apocalypse as $90 million worth of branded drugs lose patent protection from 2010 to 2014. now that the long-awaited catastrophe has finally arrived, the stocks have been rallying. customers have realized there is a future for these companies after they jump off the patent cliff. hence i've been doing the series recommending my medical breakthrough drug stocks all week. monday i put my stamp of approval on merck in part because of a cholesterol treatment it's working on that could be the next lipitor, the biggest selling drug of all time until its patent expired a month ago. tuesday bristol-myers and pfizer, two healthy companies that are working together on a new drug that prevents strokes in people with heart disease. i do like bristol-myers more because that drug will move the needle more for a smaller company. wednesday i got behind johnson & johnson. boy, this is unbelievable. the brothers johnson. they got a wall of shamer ceo, lousy recent track record. but the expectations have finally gotten too low relative to the company's prospects, especially in its pharma division. yesterday i switched things up a little to get a little pizazz. i gave it to biogen. it has run up a lot. the other ones have. i bet it can still go higher because 2012 is a breakout year for this one. with game-changing multiple sclerosis drug that i think could be gigantic. all that said, i've been saving the best for last. if you want a drug company that has faced the patent expiration abyss head-on, one with a bright future and a stock that still has plenty of room to run, then my favorite pick would be santa fe aventis, sny for all you home gamers with the dividend that yields nearly 4.8%, take that one to the bank versus your cds, everybody. sanofi is the fourth largest drug company on earth. while the stock gave you a pretty good return, 16% last year, of course reinvested dividends, which is very important. i always want you to reinvest, i think it would have been up a lot more if not for one thing, sanofi's nationality. see, the company is french. it's based in paris. 10 even though drugmakers with the kind of defensive plays that don't get hurt in the recession, even though is sanofi only gets% of its sales from europe, the stock would still get slammed every time the euro came under pressure. wasn't that the story of 2011? of course. that made perfect sense. since sanofi's profits are denominated in euros as are actual share prices. you're not buying the common stock, you're purchasing the adrs. they represent 1.5 real shares that trade in paris. so there is some currency risk. in the last month, though, i know no one believes this, i talked about it this morning on "squawk on the street." people were raising their eyebrows. the euro kind of has put in a bottom here. it's begun to rally with the fxc, use use to measure the strength of the european currency. last year the euro was a headwind that held sanofi back. this year, at least the start of the year it's become a tailwind that can give the stock an extra boost. however, that is merely one small part of the thesis behind a truly excellent company. a company that i like so much that my charitable trust owns it. you can follow the moves we make at travelers trust.com. we're doing the bulletin this week that we send out every weekend. sanofi, i got to tell you, it's terrific. and what makes it terrific? if anything, 2012 should be the worst year for this one. since three of its biggest products are going generic. the mega blockbuster plavix in may, the huge hypertension treatment avapro in march and their chemotherapy agent for colorectal cancer. they saw the dangers. they saw it. they were scared a long time. the dangers of the patent cliff and management took radical steps to make sure nothing like this ever happens again. that's how the company can project 5% annual sales growth. better than appears than the 3% growth the analysts were expecting. in many ways this is the story about the power of great management. back in december of 2008, chris viehbacher, i've interviewed him a number of times took over as ceo. he had a laser on how to deal with the patent expiration problem. listen to what he had to say at the jpmorgan health care conference earlier this month. quote, 2012 has been one of the years that has been circled in red in sanofi calendars for at least five years. when i joined the company, my focus was all around 2012. and it wasn't really how we were going to compensate for the loss of sales, but really how we were going to transform the company so we didn't go through this again. end quote. his plan for sanofi's future, viehbacher decided to invest in growth platforms that were protected by more than just a patent, areas like vaccines. barriers are very high there. diabetes, generics and animal health care products, animal chronically underrated by people, where you can build brand loyalty. the idea being if you want to get a share price at the same value as coca-cola you have to have some degree of predictability and sustainability of sales and earnings, end quote. he did mention coke too when he was on our show. what can i say? chris viehbacher, you got horse sense. the result, when viehbacher took the helm in 2008, the products that are losing patent production represent 20% of the business. last year down to 9%. the growth platforms now account for 66% of the business, up from 43% in 2008. and going to 85% of sales in 2015. see, the past is going to be like this. sanofi is now the world's largest maker of vaccines. that's a rapidly expanding market that rarely faces generic competition because vaccines are so hard to copy. they're now the leading pharmaceutical company in emerging markets, which now makes up 30% of the company's sales. and that number is going much higher. much more than pfizer, much more than merck, much more than bristol-myers, much more than j&j. sanofi has a fabulous diabetes business based around the blockbuster drug lantis which loses protection in five years. then there is the $20 billion acquisition of genzyme last year which gave them terrific exposure to rare diseases, the so-called orphan drugs that have longer lasting patents and are much harder for drugmakers to copy. orphan drugs are the reason we made alexia. alexia won the super bowl that was the 2011 postseason stock super bowl that we had. alexion. now the genzyme guidance was stronger than expected and they expected total cost saves from the bill will be higher than the initial 1.5 billion euros projections. numbers can go higher. plus earlier this week the fda approved sanofi's manufacturing plant for a key genzyme drug that had lost share in recent years because of long-standing manufacturing problems that are being solved by sanofi. one of the reasons they were able to get genzyme so cheaply is because of this facility. it got checked on this week. the stock barely moved. on top of everything else, sanofi not only pays you to wait, fabulous 4.8 yield, which is a big deal. the average stock is selling at a much lower yield. not only are they paying you to wait, but i also think that it's going to give you a terrific boost in the dividend, something that viehbacher verified when he was on "squawk on the street." they're talking about raising the payout ratio from 35% of earnings in 2010 to 50% by 2014, which means there has to be many more dividend boosts ahead. remember, he just confirmed that again with me. the bottom line, of all the medical breakthrough stocks i've highlighted this week, my favorite right here could be sanofi aventis. excellent management, juicy dividend and the euro helping instead of hurting. believe me, if this company were located in new jersey or for heaven's sake indiana instead of france, it would already be at $40. but it wouldn't be nearly as much fun to work at. let's go to jeff in ohio, please. jeff? jeff, what's going on, man. >> caller: hi, jim. a big boo-yah from columbus, ohio. >> columbus, ohio. where is my ohio state stuff? where is it? i love that school. >> caller: hey, i knew you guys have been covering pharmaceuticals this week and i wanted to throw another one out there to you, celgene corporation. >> oh, man, bob eugan. i'm full disclosure. let me talk about this for a second. when i started this series and we started researching last month, i wanted celgene to be one of the central players. it was in the 60s. but then bob eugan, that unbelievably great ceo told a great story and the stock took off and it hasn't come in. had the stock come back to 68, 69, i would have put that in this week. that's how great celgene is. all right. let's recap. it's merck, it's bristol-myers, it's j&j, it is biogen. and now the last one, not sony, sillily, sanofi aventis. these are all rebounding. they figured out the patent cliff. these are the ones that represent the great value in this market today. stay with cramer. medicare. it doesn't cover everything. and what it doesn't cover can cost you some money. that's why you should consider an aarp... medicare supplement insurance plan... insured by unitedhealthcare insurance company. all medicare supplement insurance plans can help pay... some of what medicare doesn't, so you could save... thousands of dollars in out-of-pocket expenses. call now for this free information kit and medicare guide. if you're turning 65 or you're already on medicare... you should know about this card -- it's the only one of its kind endorsed by aarp; see if it's right for you. all medicare supplement plans let you keep your own doctor, or hospital that accepts medicare. there are no networks and no referrals needed. help protect yourself from some of what medicare doesn't pay... and save up to thousands of dollars in potential... out-of-pocket expenses with an aarp... medicare supplement insurance plan... insured by unitedhealthcare insurance company. call this toll-free number on your screen now... for this free information kit, including this... medicare guide and customized rate quote. it is time, it is time for the "lightning round"! cramer's calls, buy, buy, buy, sell, sell, sell, play to the sound -- [ buzzer ] -- and then the "lightning round" is over. are you ready, skee-daddy? it's time for the "lightning round." i'm starting with larry in alabama. larry? >> caller: hey, mr. cramer. boo-yah from atop sand mountain in northeast alabama. >> not that familiar with that area, but i bet you i would love it. what's up? >> caller: got two quick questions. number one, why do you always take off your wristwatch before the "lightning round"? >> okay. >> caller: and number two, with nat gas being so low, is it worth considering eqt or chesapeake? >> the first one is i scratched my brightling and sectly eqt no. i didn't like what they had to say. i don't want to own that stock. i would much rather own a -- look, chevron down three is better than owning that one. let's go to steven in new york. steven? >> caller: hey, how are you doing? >> not bad. >> caller: quick question. what the heck is going on with tech? >> tech is both an oil and a natural gas. there is much less natural gas because in the last 20 days we've had an unprecedented collapse of natural gas. everyone is freaking out heck. i can't even read twitter. it's heck, heck, heck, heck, heck. hey, listen, man, if you don't like it, then sell it. but i believe in heck, okay. i believe in it. and i believe in its ceo. and i'm not telling you to sell it. let's go to derek in georgia, please. derek? >> caller: boo-yah, jim cramer. >> boo-yah! >> caller: how you doing, buddy. >> real good. >> caller: i'm talking adsk today. >> excellent quarter. i like this stock. >> buy, buy, buy! >> let's go to tom in florida. hey, tom. >> caller: hey, jim. i want to thank you for taking my call. imlook for guidance on hersha hospitality. >> it's horrendous. it's a good company and i want to buy it. that, ladies and gentlemen, is the conclusion of the "lightning round"! >> the "lightning round" is sponsored by td ameritrade. flo rida. you have to do flo rida. ♪ are you telling me to go? i'm not singing because i'm not flo rida. i'm not cool like flo rida. i'm going to pretend that i'm not on camera, right? like a week that was thing. ♪ ♪ i get a feeling, i get a feeling that i've never, never -- who would have thought that i knew exactly who flo rida is. i'm not cool. ♪ oh, sometimes i get a good feeling. how great was my flo rida? >> sick. >> sick great! sick great, man! >> and now jim cramer explains groupon. >> groupon is killing itself, sending me all the coupons for justin bieber toothbrushes. at least they haven't senn sent me a coupon for a brazilian lately. i don't want to go to brazil. >> this concludes tonight's jim cramer explains groupon. ♪ and they called it puppy love ♪ >> siri, do you know her like i know her? the woman on the phone. this woman can organize your life in the way you didn't think is possible. she woke me up this morning, 4:15, right on target. i turned to siri and i told her i was captivated by her. and she asked is that so? plantful. when i told her absolutely that was the case. she was self-effacing. i guess that's right. i'm crazy about her. i'm afraid to ask her on a date. what if she says she can't? what if she has to wash her hair tonight? >> sorry, jim, can't tonight. i've been meaning to get a root canal. >> siri, i love you. >> this is moving too fast for me, come on, speak to me! i love you. now what can i help you with at this time? there she goes. it's private. anyway, this is the best -- [ whistle ] >> thank you. >> i think you're the greatest, siri. i need you. d investing tools of wall street and make them simple, intuitive, and available to all. distill all that data. make information instinctual, visual. introducing trade architect, td ameritrade's empowering web-based trading platform. take control of your portfolio today. trade commission-free for 60 days, and we'll throw in up $600 when you open an account. ♪ you and me and the big old tree ♪ ♪ side by side, one, two, three ♪ ♪ count the birds in the big old tree ♪ ♪ la la la [ male announcer ] the inspiring story of how a shipping giant can befriend a forest may seem like the stuff of fairy tales. ♪ ♪ you and me and the big old tree side by side ♪ but if you take away the faces on the trees... take away the pixie dust. take away the singing animals, and the charming outfits. take away the sprites, and the storybook narrator... 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[ male announcer ] sustainable solutions. fedex. solutions that matter. what are you supposed to do when a company you know you like and like a lot says that the next quarter will be disappointing, but that it will also possibly be the bottom, and after that things will get a whole lot better, even the same year, particularly by the end of the year because of brilliant, exciting new products that i think could take the cell phone world by storm as well as a bunch of other entities. that's the fundamental questions surrounding cypress semi, cy. maker of small, low-powered semiconductors called programmable systems on a chip which are used in all kinds of end markets including mobile phones and tablets along with nonapple touch screens, the s-ram, which is slower growing business, but it does generate a ton of cash for the rest of the business. so yesterday cypress reported some real nice fourth quarter results. recent earnings beat off a 29 cent basis on revenues that rose 7% for the year. i thought the thing was going to rocket it. but the stock got pole axed because the guidance for the next quarter was seen as real disappointing. customers remain cautious. bookings are still under pressure. and when you throw in the expectation of seasonally slow and set sales, you got a recipe for a weak quarter. and that's why cypress was put through the meat grinder yesterday, falling from $19.50 at the close wednesday to 17 dollars 19 yesterday, 10% of its value, 24 hours. but i don't believe that decline tells the whole story, not by a long shot. why? because cypress also said assuming there is no additional macro they expect to bottom out in the bottom quarter of 2012, the one we're in right now and lead to a strong second half as long as new product designs are going to be -- let's put this way. they're going to be in production and they're going to start having some big customer orders. if that's the case, then the stock could be a bargain right here. and you know what? cypress semi-mip's management has a ton of credibility. even after yesterday's bruising, the stock is still giving me a phenomenal 325 plus gain, 325% gain since i got behind them in september of september. while they might be facing a seasonally tough period, longer term they have a lot going. let's talk to t.j. rodgers and find out about the earnings and what is going to come next, including the big first quarter bottom call. t.j., welcome back to the show. >> thank you. >> okay. so i think our viewers are going to say well wait a second, jim. how much of what happened in the guidance is a secular decline, how much could be cyclical, meaning gdp maybe not coming back, and how much that they're selling declines that may not at this very moment have the hottest product versus competitors? >> well, we -- the term perfect storm is overused, but we actually had a bunch of things go very, very well the last time buy for some very profitable products in the fourth quarter. combined with, i'll admit it, having a hole in our revenue in the touch screen phones in the first quarter, and all of that combined to forecast that the street didn't like and took two bucks out of our stock. i think we would have had about half of that decline just based on seasonal factors. but to be -- i have to be completely honest. we're about one quarter late. we were about one quarter late in the middle of last year getting our newest product for cell phones designed in. and right now we've got a lot of good design wins. but the way it works you get your design win, you know your future is going to be good. but it takes about six months for those phones to get designed get ramped up. right now we're in a mode where the first quarter we're going to wait, wait for those wins to kick in the second half of the year. >> you have always been a tremendous creator of value for shareholders. you have now stated the case knowing that this quarter is not that strong, but you did say the second half could be good. is that when you are able to deploy your own cash? because you've got a good buyback, to be able to say look, we know when we've got value, it's just not this quarter. is that an opportunistic thing for cypress to do or is that too aggressive? >> no, buying back. we bought back 600 million, and then our board approved another 400 mill as a billion. and we've got about 300 million left of that billion. and the stock is priced low right now and absolutely we're going to be going into the market when the stock is low, because very simple, buy low, sell high. and we're buyers. >> now there are chips that i think that are technically inferior to you that are winning at a very big client. and the competitor is texas instruments. i'm just going to say it. a big client. i know it's difficult for anyone to talk about. but let's say it's got a very hot cell phone, a very hot tablet lineup. at what point are you able to be so technologically superior that no one can say no to your offer, even if they're already entrenched with another competitor? >> we believe the chip we've introduced in the fourth quarter of last year that is getting a lot of tracks and introduced them workweek 47 of last year has already got a lot of wins is the most superior chip in the business. and we believe we will take market share. now with regard to ti, they're a great company and they've got a proprietary product that was designed for that end customer. >> right. >> and that's kind of a lock that is above and beyond just being good in the marketplace. but in the merchant marketplace where there are two or three vendors of chips like this period, there are a lot to claim, but there are three that really matter. we believe we have the best chip. and our design wins, we're taking those design wins right now. >> now, you also have a tremendous business in readers, ereaders. i think that the analysts seemed to underrate it. as someone who loves the product, maybe i overrate it. but the reader business can be a gigantic business, right? i mean this is just something that is coming on. it's not peaking. >> that's right. if you look at the tablet market, there is apple. and then there is -- there is samsung and everybody else. but ereaders is a category unto itself, sort of unto the tablet market. that's taken off. one out of every four or five people in the u.s. have it. the chip market is different. they have to be lower cost because they're lower costs. we have a solution and absolutely when we're bullish about the second half of the year, a big part of that is ereaders, and we are designed in. >> that's excellent. i have to do a little politics. i don't know in you snow steve chase from occidental, a great businessman, ceo. he is saying there is a big change in california that jerry brown, jerry brown is saying listen, we want you to drill. we want to put people to work, we want to be more pro-business. you have complained at times about california. are you seeing this jerry brown? >> california is and continues to be one of the worst states in the united states for business. if you look at ceo magazine, which does a poll of chief executives every year on the climate for business in the various states, california is ranked dead last five years in a row. and jerry brown is -- is as bad as any of them have been. he is as bad as he was in his first term. he is building this $100 billion train that goes from some town in the center of california to some other town in the center of california, spending money. we've got taxes that are the third worst in the united states in california. it's a shame what an opportunity here is in california and how awfully the governors of california, and i include arnold before him and gray davis before that. it's not just governor moon beam. they're doing a terrible job. >> all right. had to get it in. t.j., i think you're going to be opportunistic one buying your stock back. i hope our viewers know how much money you have made for them, and they should be in there buying it with you. great to see you, sir. thanks for coming on the show. >> thank you. >> that's t.j. rodgers, ceo and president of cypress. you have a gain by going with him. he is very specific. he is going to use this lull in what i regard as going to be a very good second half to buy back stock. you know what you should be doing? >> buy, buy, buy! >> buying right along with him. that's cypress semi, cy. stay with me. just because companies' earnings currently matter more than europe at this moment, that doesn't mean that everything is back to normal. while many companies are having terrific quarter, some others are struggling. you have to have a range of sectors in your portfolio to make sure you don't get caught by surprise. that's why we're playing am i diversified, and do so every single week since this show started. this is where you call me and tell me your top five holdings, and i tell you if you're diversified enough. maybe you need to mix it up a little bit. matthew in california, matthew? >> caller: yes, sir. professor cramer. >> yes? >> caller: big boo-yah from santa barbara. >> oh, man, the most beautiful place on earth. uc barbara, going to graduate school there. i'm sorry. go ahead. >> caller: all right. this is for an ira. i'm looking for high yield and future growth. bristol-myers, kinder morgan, duke, enbridge, and my last is a a nally. it's a big builder but it seems to be underperforming. and am i diversified? >> let's go to work. first, i want you to talk to your tax professional, because there are rules for iras and for limited partnerships. that do limit how much you're allowed to make. that's the reason we've been favoring kmr, which is the kinder morgan version that doesn't have tax consequences. bristol-myers, a terrific high yielder. duke energy, a great you'll. kinder morgan, a great partnership for oil and gas. annaly, you have to figure the distribution in, the stock has not done nearly as badly as you might thinkment enbridge, again, if you're buying the enbridge partnership that is like kinder, that's going to be difficult. and enbridge and kinder morgan are way too much alike. i would institute funds, cedar fair. they said great things yesterday. the stock has been breaking out. i would prefer that to enbridge. and i would make those moves and i would make them monday. again, talk to your tax professional. there are issues with these master limited partnerships and tax-free investing, okay. it does -- are very tricky. johnny in texas, johnny? >> caller: hey, this is johnny. my stocks are churchill, dwight, general, mastercard and hasbro. >> man, speed record. i felt like i'm in the bonneville salt flats. a company i wanted to be able to professional. another undervaubld company really getting hit. they were like the jar company. i liked to garden and use the jar, but it's now really an aerospace play. dollar general, that's a terrific dollar store. that's a good one. and mastercard is a financial tech. so we've got what do you want to call that? you want to call that a soft goods company, a toy company, an aerospace, we got a retailer and a credit card/financial tech that is perfect diversification. >> hallelujah! >> and a lot of stocks that i really, really like. hey, why don't with go to paul in ohio, please. paul? >> caller: how you doing, mr. cramer? >> real good. how are you? >> caller: good. my 3-year-old grandson jacob is sitting here with me. and we want to know if he is diversified. he is invested in these following stocks, and he is in the dividend reinvestment plan. >> congrats. i was talking to some guy yesterday at shorty's bar downtown. he and his father talk about the show all the time. i love it. what's up? >> caller: okay. first energy, at&t, bmy, avp, and whi. >>. [ laughter ] just kidding. here we go. avon. bristol-myers we like that, we like that yield. first energy is really undervalued. people think it's poorly run. i defer. i don't believe that. whirlpool reports next week. it's going to be a bad quarter, i feel. at&t reported yesterday. no one liked the quarter but it has a good yield. avon i'm concerned about the yield. you have a utility, a houseware, appliance company and a telco. i am worried about avon's dividend. i am worried about whirlpool's dividend. and that, ladies and gentlemen, is the conclusion of -- >> that was easy. >> -- am i diversified. >> hey cream. >> boo-yah! >> see the world through jim cramer. "mad money," week nights on cnbc. it's kind of hard to make decisions by yourself all of a sudden, when you have been making them with somebody else for 35 years. i guess there is something in me that has always been strong. i've always gotten through some pretty rough stuff without falling to pieces. ♪ ♪ and what it doesn't cover can cost you some money. that's why you should consider an aarp... medicare supplement insurance plan... insured by unitedhealthcare insurance company. all medicare supplement insurance plans can help pay... some of what medicare doesn't, so you could save... thousands of dollars in out-of-pocket expenses. call now for this free information kit and medicare guide. if you're turning 65 or you're already on medicare... you should know about this card -- it's the only one of its kind endorsed by aarp; see if it's right for you. all medicare supplement plans let you keep your own doctor, or hospital that accepts medicare. there are no networks and no referrals needed. help protect yourself from some of what medicare doesn't pay... and save up to thousands of dollars in potential... out-of-pocket expenses with an aarp... medicare supplement insurance plan... insured by unitedhealthcare insurance company. call this toll-free number on your screen now... for this free information kit, including this... medicare guide and customized rate quote. and waiting in line. i don't have to leave my desk and get up and go to the post office anymore. 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