Transcripts For WBAL Mad Money 20130125

Pulled under by the shakespearean tragedy that is apple. How can we keep going higher with the disarray in washington . The higher payroll taxes, and the general sense that the economys not getting any better. Is it . The answers simple. Why you may not think the overall economy is Getting Better, youre missing the big picture, partner. If you were to ask me to game the market using just one figure, one figure only, it wouldnt be what apple earns, the gross domestic product, the growth rate of earnings or the dividend yield of the s p, it would be the weekly jobless claims. The weekly jobless claims is an indicator of future employment in this country. Theres absolutely no coincidence that we had fiveyear highs today in the stock market. At the same time that unemployment claims hit fiveyear lows. It isnt fanciful that the markets roaring because jobs are being created at an accelerating pace. Its the most important determinant of the stock market. After all, the market got crushed when unemployment went above 5. 5 and soared right into the great recession. I think these positive jobless numbers are occurring because of the certainty that comes from putting a president ial election and a tax fight behind us. Plus, the warring Political Parties seem to have smoked a peace pipe. It does seem like a truce at hand deferring a ridiculous and harmful government shutdown. Throwing a huge turn in china that converts believers every day along with stabilization of europe and you know why our Multinational Companies have at last powered higher. All that good news in the jobs it creates are causing a radical revision in what were willing to pay for future earnings. Thats right, the price to earnings multiple, the ratio of how much well pay for the profits companies are going to have down the road is headed north and therefore so are the stock prices. Were willing to pay up because of the prospect that things are, indeed better. Let me show you what i mean. Lets take the transports. Theyve been scorching, scorching despite the index being home to money losing airlines, beaten down trucking companies, worldwide freight plays, and the railroads which were just annihilated by an historic decline in the most important cargo, coal. Whats happening now if the economys Getting Better for the airlines . The seats are being filled, raising prices. For trucks, theres more commerce domestically, more to ship. For freight, the stabilization in europe and the nation is gigantic, every bit as important for United Parcel as the huge orders from amazon. And, yes, were paying more for the rails because we have to believe that coal has bottomed, down 19 , because electric will rise. Europe and china will use our coal. Meanwhile auto for woods and homes as long as grains, oil all need to be moved to where theyre needed. The bottom has been reached, the Gross Margins can climb because price increases can be put through, right through along with the larger volumes and the stocks go higher. Were seeing the same thing with the industrials. As we know from watching boeing go higher, the best example because the rally is happening despite the dreamliners many woes. If boeing can go higher, what industrials cant climb . How does caterpillar go higher despite the huge chinese scandal . Simple, because were starting to build things in this country, things that need tractors and the chinese are reaccelerating. They need tractors and engines too. We talked about the growth in heating and airconditioning. The orders for carrier, the Carrier Division of united technologies, or the elevator orders for otis. So we pay more for the stocks. In the meantime, we know taxes on our dividends arent going up. They stayed almost the same. Thats a remarkable surprise that nobody talks about. But the need to find higher after tax yields is behind the huge move in the big dividend paying drug stocks. Its why we pay more for bristolmyers as we did today or Johnson Johnson which kind of hangs in there despite the earnings miss and the horrendous implication of their faulty hip product. Its why were paying more for the oils, all the oils because more oil will be used when things get better sending the hesses and conocos higher with them. Thats how schlumberger can be ten points above where it was when it preannounced a shortfall. And, of course, any uptick in employment has huge implications for autos and for homes where for a couple of years we were building homes at a rate that came in under what we were building when we had half as many people in this country. More homes means more retailers doing business to fix those homes, and it means more businesses for the banks, the processed home loans and that group gets revalued upward. We use more copper, more wood, more fiber, aluminum, glass, paint, tools, when we build more homes and cars and planes, especially when the demand seems to be sustainable and rising. So we keep paying more for the earnings of all the Companies Involved in that complex. Yep, we pay more for all of those stocks when the Virtuous Cycle gets going as it is right now. And remember, employment just turned. Thats what we key off of to decide what to pay for future growth. Companies will have more demand, higher prices, better Gross Margins, better than expected earnings and those better than expected earnings are the life blood of this entire magnificent rally. The only area where it gets really confusing is tech. And thats a huge part of the s p, the biggest, talk about a battleground. What did we pay for apples earnings now that theyre decelerating . Do we take money out and buy other Technology Stocks like intel or microsoft which reported mixed but in line quarter, 76 cents a share, onecent beat, drop a tad, 1. 5 in after hours trading, or do we go by avnet, like whole foods, which reported terrific upside surprise today. Or do we pile into what we know is growing faster . That stocks that arent tethered to personal computers alone, facebook, amazon, google, and netflix, which rallied more than 40 today. Are those four stocks the newest four horsemen of tech . Replacing intel, cisco, microsoft, oracle. Are those now our father stocks like merck and pfizer and lilly were before them or general motors, bethlehem steel and woolworth were before those . I would argue kind of, yeah. Apple being revalued identically to intel, microsoft and oracle on earnings basis, lower than those. Those were once highgrowth stocks where the growth has stalled out. Their shares trade at a discount. Apple in a sad way is a source of funds. Its supplying the fuel for the revaluation higher as it sheds billions of dollars in market cap, money that goes into the other segments of tech and the rest of the market in general. Fine young stock cannibals. All these revaluations are playing out right now and thats why were seeing such a robust market. Money coming in from the sidelines, recognizing with washington off the front pages with loan growth picking up and Interest Rates on bonds not competitive, its time to pay more for stocks. Heres the bottom line, this is the kind of super bullish moment we only see once or twice a decade when we decide the old tv show has it backward, the prices arent right, theyre wrong and they must head higher, almost in lock step to where they really belong. Scott in california, scott . Hey, scott. Caller how you doing, jim . This is scott from studio city in sunny, california. Loving that. Caller booyah for ya. Its good to have you onboard, whats shaking . Caller netflix, yesterday at the close, basically ive been trading the market methodically and its given me some profits, 95 in cash, looking for something to buy, got a little bored, saw netflix, i know i know i shouldnt chase it being up 5 on the day, but i decided to throw some money at it and a couple minutes later, i noticed it popped 35 , and i gave you a call because i was wondering what i should do. Look, i do these videos every day for realmoney. Com, and i said if you owned if you owned netflix, take a little off the table today. Because i dont like parabolic moves, a Great Company but thats up too much. Cut it in half tomorrow. Cut it in half. The move is too big. Lets go to tyler in iowa. Tyler . Caller booyah, jim. Lagrand, iowa. My stock is invn. The consensus after the bell yesterday and had a solid run today. Do you think itll get back to the alltime high of 20, or where do you see it going from here . That is a good stock and i think you should hold on to it. Its funny, we looked at this once before. We should look at it again. Wow, that has moved a great deal. We have to do more work on that. We have to do more work on that. Thats a monster move. This is a rare moment in investing. Things are improving. Dont drive yourself crazy by missing the big picture. As employment gets better, stocks go higher. Mad money will be right back. Coming up steely resolve . Industrial giant timkin delivered a quarter that pleased the street this morning. Is it the fire you need to heat things up . Tonight cramer checks if the stock is on the right track in his exclusive with the ceo. And later, assault on apple. Relentless selling drove shares of the former street sweetheart apple down 10 in reaction to their latest Earnings Report. Tonight, cramers slicing it open and asking the question on everyones mind, is it done going down . Plus tech check, apples sour Earnings Report kept the nasdaq back while the rest of the market roared. But shares of i. T. Supplier avnet bucked the trend, surging after reporting. Dont miss cramers exclusive with the ceo as he browses the supermarket of tech for whats working. All coming up on mad money. Dont miss a second of mad money. Follow jimcramer on twitter. Have a question . Tweet cramer madtweets. Send jim an email to madmoney cnbc. Com or give us a call at 1800743cnbc. Miss something . Head to madmoney. Cnbc. Com. I played a round of golf. Id in the last five hours . Then i read a book while teaching myself how to play guitar; ran ten miles while knitting myself a sweater; jumped out of a plane. Finally, i became a ping pong master while recording my debut album. How you ask . With 5hour energy. I get hours of energy now no crash later. Wait to see the next five hours. Those spots are actually leftover food and detergent residue that can redeposit on your dishware during the rinse cycle. Gross. Jetdry rinse agent helps wash them away so the only thing left behind is the shine. Jetdry rinses away residues for a sparkling shine. But they havent experienced extra strength bayer advanced aspirin. In fact, in a recent survey, 95 of people who tried it agreed that it relieved their headache fast. Visit fastreliefchallenge. Com today for a special trial offer. Visit fastreliefchallenge. Com excuse me, sir im gonna have to ask you to power down your little word game. I think your friends will understand. Oh no, its actually my geico app. See . I just uh paid my bill. Did you really . From the plane . Yeah, i can manage my policy, get roadside assistance, pretty much access geico 24 7. Sounds a little too good to be true sir. Ill believe that when pigs fly. Ok, did she seriously just say that . Geico. Just click away with our free mobile app. Never let it be said that americas no longer a great manufacturing nation. Economies all over the world are doing a whole lot better than they thought theyd be even a month ago. Thats why the industrials have been roaring. And here in the united states, we have the best industrial manufacturers on earth bar none. Companies like timken, largest manufacturer of roller bearings and a major maker of highengineered bearings and alloy steels. I like the stock so much, recently bought it for my Charitable Trust as we visited them in ohio. You can follow along with that at actionsalertplus. Com. Timken supplies a host of industries that are on fire right now. All of these are bouncing. And also the rebound courtesy of the turn in china. Oil and gas business too. Aeros, autos, china, oil and gas renaissance. These are four of my top themes for 2013, and timkens hitting in each of them. Back in 2011, 30 of their products, their steel business sold, didnt even exist. Thats right, the product lines didnt even exist five years before. Thats what i mean about this company being an innovator. Now, just this morning, timken reported a fabulous quarter, a 16cent earnings beat off a 6 cent basis and though its revenues fell yearoveryear, they came in higher than expected. Their response to the stock rally convincingly. We last spoke to timken from the floor of their faircrest steel plant when we went to canton, ohio, on october 18th. At the time trading at 39 and change, since then, its risen to 53. Lets check in with jim griffith, president and ceo of timken, learn more about what went on and where the company is headed. Mr. Griffith, welcome back to mad money. Its great to be with you, jim. Do you think some of what happened in your stock since we saw each other last, that people believe 2013 will be a better year, or the fact that the year did finish pretty strong even if some of the parts, oil and gas, some trucks, werent as robust as wed like . Well, i think the markets beginning to recognize that the Timken Company today is a very different company. 2012 was our second best year structurally in terms of earnings, and as you said, we went through a Fourth Quarter where our customers were adjusting inventory, our plant utilization went down to 50 . And yet we delivered a good quarter. And i think that recognition is getting through to the market. Well, i think this is really important because ive studied the Steel Industry for a long time, visited bethlehem steel a bunch of times. Once they went below 90 , okay, 90 of their factories being used, the stocks plummeted. How is a Steel Company able to make this much money at 50 . Well, i think the answer is you said in your introduction, we really arent a Steel Company. Were a Knowledge Company that goes to the market. We create unique value whether its with bearing products or Steel Products for our customers and then we translate that on a platform of excellent execution. And that combination gives us better earning power. Now, i did find versus when we talked to each other last, i read through the lines of this excellent Conference Call and i see asia turn. That to me is just unassailable at this point. We are seeing a change in asia, a significant change. Were beginning to see the order books fill. We actually had a good booking month in december, a good booking month in january. So we are beginning to see it particularly in china where the actions of the new government are starting to come through and translate into orders for us. Well, i think thats very, very big. Because i know when we saw each other, you described how many people you have working in china, right . Yeah, we have about 4,000 people in china, which is our investment in the 21st century of demand, getting into the Fastest Growing markets of the world where they are Building Infrastructure and that infrastructures being built around timken products. Now, also, when we were there, i felt remiss. You do well in this country in part because you do have a great source of energy, right . American energy is playing right into timkens hands. Well, in the united states, we have a good energy supply, but more than that, the change in the Energy Markets is creating a great opportunity for us. The growth of a domestic natural gas market, a drilling market, domestic fracking market is creating a great opportunity for timken products, and thats part of whats driving our profitability. Now, after i saw you and spent some time in your plant and with your terrific people, i came to understand that timken, sorry for using this word, but its a wholistic experience. Great Technology Arm doing a lot of terrific products and theres some guy who buys a lot of stock and says we ought to break up timken. Tell me if you think im wrong, but i think that the parts are actually augmented by the whole, not worth more than the whole. Yeah, theres no question about that. We leverage the synergies between all parts of our business to create value. In fact, just this quarter, we started delivering on a Major Contract with one of the transplants where were selling steel, but were selling it in the form of a preformed product for one of their transmission plants because were taking the capabilities from our bearing business and applying them to the technologies in our steel business. And also, just the way you brought the bearing business pointblank. One thing that never wavered here, aerospace is really good for you, isnt it . Our Aerospace Business has turned nicely. In our Aerospace Business its only about 50 bearings. Weve gone well beyond bearings into services and, in fact, into making complete transmissions for some of the military helicopters. And that market is actually a positive market for us despite what you hear from washington. One last thing, im trying to understand where we might get a trough in trucking, because trucks are very important for timken. We are beginning to see truck orders troughing in asia. Will you see a trough in trucking in 2013 . Again, as you look at the truck market specifically, youve got to look at it on a global basis, and the european truck market is already at relatively low levels, the u. S. Truck market is at relatively low levels. Asia, its beginning to strengthen in some places. Theres a chinese truck market, a domestic truck market that is transforming to world standards and we have a large position in india. So overall, thats a reasonable market for us. Its down in the Fourth Quarter of 2012. It will start 2013. Relatively slow, but in the longterm, we think thats a very positive market for us. I want to congratulate you, jim, for both the Great Technology that you employ and the fact that the old days Steel Companies would go under in this country at that level of utilization. When things get better, your numbers will be magnificent. Jim griffith, president and ceo of Timken Company, tkr, thank you so much for coming on the show, sir. Jim, thanks for inviting me to be with you. Guys, this is everything we want out of this country, out of the people who work in this country. And these guys have really got it going now. I can tell you from someone who studied the Steel Industry for many, many years, these Companies Used to not survive at this level of operation. Now they thrive. Its going to be amazing. Tkr, stay with us, stay with cramer. Coming up assault on apple. Relentless selling drove shares of the former street sweetheart apple down 10 in reaction to the latest Earnings Report. Tonight, cramers slicing it open and asking the question on everyones mind, is it done going down . We know a place where tossing and turning have given way to sleeping. Where sleepless nights yield to restful sleep. And lunesta® eszopiclone can help you get there. Like it has for so many people before. When taking lunesta, dont drive or operate machinery until you feel fully awake. Walking, eating, driving, or engaging in other activities while asleep, without remembering it the next day, have been reported. Lunesta should not be taken together with alcohol. Abnormal behaviors may include aggressiveness, agitation, hallucinations, or confusion. In depressed patients, worsening of depression, including risk of suicide, may occur. Alcohol may increase these risks. Allergic reactions such as tongue or throat swelling occur rarely and may be fatal. Side effects may include unpleasant taste, headache, dizziness, and morning drowsiness. Ask your doctor if lunesta is right for you. Then find out how to get lunesta for as low as fifteen dollars at lunesta. Com. Theres a land of restful sleep. We can help you go there on the wings of lunesta. I havent thought about aspirin for years. Aspirin wouldnt really help my headache, i dont think. Aspirin is just old school. People have doubts about taking aspirin for pain. But they havent experienced extra strength bayer advanced aspirin. In fact, in a recent survey, 95 of people who tried it agreed that it relieved their headache fast. Whats different . It has microparticles. Enters the bloodstream fast and rushes relief to the site of pain. Visit fastreliefchallenge. Com today for a special trial offer. What can i say about apple . Of all the things that went wrong with that lackluster quarter yesterday, worst of all, by far was last nights imperious condescending Conference Call. The stock got hit with a host of downgrades and price cuts on its way to a 63point comedown, in large part because the call explained nothing about whats really going on. Some Companies Just dont want to do the call. They dont want to waste their time, be constrained by those myopic wall street analysts who spend all their time Building Models rather than sleek, elegant, beloved machines. They dont have to defend themselves or their actions to these analysts or make the case for their stock in the face of queries from lesser minds. In short, they dont want to have to justify anything theyve done beyond simply informing these overpaid jackals about their own supremacy. These companies believe in the form of wall street guidance. The thing speaks for itself. I dont blame anyone, any management feels this way. Going through these Conference Calls is not unlike wasting solid time at the dmv to get a new drivers license. Perhaps visiting customs in some god forsaken Banana Republic where you have to play along in order to get the heck out of there. It is better than a colonoscopy. But its part of the process. The acknowledged price you have to pay in order to get people to recommend your stock. Its what i call the cost of sponsorship. The process of promoting something you might very well think is unseemly or even unnecessary, your companys stock price. They do it the best they can. Try not to be too petulant or angry or condescending or too dismissive, but for some, that can be a very, very tall order. And this is what apples ceo tim cook and his team are suffering through right now. Theyre trying hard to figure out why they have to deal with this substrata of specimens known as wall street analysts, phyla, nematodes. That corrosive but never to be admitted undercurrent stands out from last nights Conference Call. Of course, that wasnt so hot, or the over under ordering of supply parts if for the ipad mini, some would call it arrogance, admitting that apple thinks it simply doesnt have to play ball beyond the basic information it feels the need to give out. The subtext being, if you dont like our answers, go figure it out yourselves. Good luck because well fire any supplier who helps you try to do it. Others would say this attitude is about trying to prevent anyone from piercing the veil, the veil that says, look, we make the best products in the world, and everyone knows it. And if we could make more of what we like, everyone would buy it, and we could charge whatever we like and wed still do great so go stick that earnings model of yours in your pipe and smoke it. All of this is totally realistic and understandable from apples point of view because of the past. It even works if the real subject that the analysts cover is the quality and degree of love for the products you make, not some feckless piece of paper that trades on some exchange, nasty, dirty thing. But its thorny and uncomfortable if the real issue is the trajectory of the stock price. It has the audacity to represent the company value, its downright horrendous. When that trajectory is in a tail spin and management doesnt want to dignify why that might be or how it could be stopped, perhaps this is because the guys at apple dont even care. I dont know. Worse, maybe its because they think the analysts trying to set the price are so obtuse like the warden in shawshank that it isnt worth working with them in order to help them. Almost as if you can hear the top brass saying, quote, if only we could take these numbers and statistics right to the people instead of having to deal with the stooges, end quote. Thats how they can brush off questions about market share or pricing, actual demand. Its just pedestrian entreaties from knaves who wouldnt know the difference between a sleek mac, lamborghini, and a dell or hewlettpackard. But theres a gigantic elephant in the room and thats the stock price. It will not be ignored. Apple seems to believe the stock is not obeying the will of the satisfied customer or hearing the charms of the management or marching to the tune of the most innovation, the ipad mini. Unfortunately the stock is now reacting to the litany of mundane inputs which have trapped the stocks of other companies. Real demand, competition from other companies, Gross Margins, something made by a samsung, for heavens sake. I thought they were like a Steel Company. The stock is reacting to how much money is being made on each item. The dreaded nitpick of Gross Margins. That mundane, nasty number that its inferiors, competitors are suddenly making superior product at least in the minds of some of the less savvy consumers out there, the superior. What must be really galling to apple is the fact these analysts actually think they need ammo to stay positive, ammo to do something as simple as breathing, which is to reiterate the buy ratings. I can see tim cook turning to his colleagues, genuinely puzzled, saying, its as if we have to come up with something breakthrough, something dazzling for them beyond whats obvious, which is how great we are. But at some point, your companys products may face genuine competition. In many places on earth, other Companies May be taking share, which is whats happening with that nasty little samsung phone. Or you might have product lines in decline like the ipod, but cant carry the load like the ipad. And its a funny thing, when that happens, you actually do need to give these analysts something juicy, a morsel. They feel like theyre sticking their fingers in the dike. The result, the flood is unleashed and you get the wholesale alienation of the lap dogs who cover the stock. It was like when the wicked witch of the west melted and all the winky guards rejoiced. Now, if apple were private winky guards rejoiced. Nobody would care if this company were private, if the stocks value were equal to the cash, who would need these gremlins . Apple wouldnt have to do a Conference Call. Which brings me to the second big issue, in the wake of the disappointing quarter, how are we supposed to value apple stock now . Do you slap a multiple of eight times earnings on it where its currently trading . Valuing the stock at 9. 5 growth rate . Do you draw the line in the sand with slightly lower growth rates . Thats where apple used to trade before the stock started peaking. Those days are gone. I see three ways the stock could go. Go higher. Ive got some solutions. I dont want it lower, my Charitable Trust owns it for heavens sake. If apple would start an aggressive buyback, something they could do given they have like 137 billion in cash, they could shrink the share count and get a higher multiple. It could dramatically boost the dividend to give you real yield support if you think either of these things will happen, then this stock is a buy right here, right now. It could make a terrific acquisition, more on that later which could really send it flying. Without a massive dividend boost and monster buyback not like the current desultory effort or a deal for something that makes the company more social to reanimate the stock, apples caught in this brutal process of going from a growth stock to a value stock. It has to overshoot to the downside where it really should be, which is whats happening right now to get to the point where it should bottom. Once you become a value stock, you cant rocket higher anymore because the animal spirits, theyre gone. If any stock is due for a bounce, its this one. Heres the bottom line, apples management needs to realize what everyone else has, that its a regular Public Company especially since the death of the founder steve jobs. And until it either stops being public or trades towards cash, management will have to do a better job of explaining itself. And if they care about the share price at all, apple needs to hit shareholders with a deal, a massive buyback or a major dividend boost. Thats why its worth holding. Theyve got to do that stat. Otherwise, my prediction a la another onetime crowd pleaser, mr. T. , is pain. Lets go to brian in maryland. Please, brian . Caller booyah, jim, from baltimore nation. Ravens country. Oh, man, good to have you onboard. You know im thinking harbaugh will win this weekend. Caller i think a harbaugh will win. I dont like to narrow it down beyond that. Go. Caller jim, my questions in regard to the transforming tv market. With the inevitability of technologies like google fiber and the itv by apple, are their new Investment Opportunities within the space of traditional content providers . Right. Caller and also relatively new internet content providers such as netflix. Uhhuh. Well, look, netflix went up too much today. But netflix is good, by the way. Netflix is good because its growing subscribers. Time warner has been a huge favorite of mine. I think its terrific, its cheap. And, you know, look, i work for comcast, so its like, you know, i cant tell you its good, but i do love the cable business very, very much. I want to go to david in virginia. David . Caller hi, jim, and a big Baltimore Ravens booyah from northern virginia. Redskins booyah, rg3 Means Nothing to you, booyah. Just because your team isnt in, you dont adopt a new team. Caller thats okay, rg3s on the sidelines for now, but we hope he gets better. Dr. James andrews is in the huddle. Whats up . Caller thanks for your books and show, jim, ive become a much better home gamer with your assistance. Ive done my acquisition homework on this one, but i have a couple items id like to share. Okay. Caller my stock is a large i. T. Services provider with global exposure. Computer sciences corporation. Always a bridesmaid, never a bride, partner. Caller ticker csc. Last two quarters blew away street expectations. Current estimates appear conservative. They have a strong turn around ceo with their change in march of 2012. A mad money interview with him would be great. Their Balance Sheet is improving, forward growth is solid, exposure to the Defense Industry could be a problem, though. Yes. Thats what dave, thats what i was going to tell you, is listen, its got too much defense. But you know what were going to do . Well do a full workup of csc. Its a very inexpensive stock and if it has any earnings momentum, that could couple with the takeover potential. I like this idea, you obviously know it real cold, im going to get on it myself. Memo to apple, okay, do something with that mountain of cash, something. Give us something, otherwise theyre going to come back, theyre not with the surrendered Dorothy Group anymore. Youre sitting on a lot of cash. I want a deal, a buyback, a dividend boost. Otherwise, yeah dont move, lightning round next. [ female announcer ] going to sleep may be easy, but when you wake up in the middle of the night it can be frustrating. Its hard to turn off and go back to sleep. Intermezzo is the first and only prescription sleep aid approved for use as needed in the middle of the night when you cant get back to sleep. Its an effective sleep medicine you dont take before bedtime. Take it in bed only when you need it and have at least four hours left for sleep. Do not take intermezzo if you have had an allergic reaction to drugs containing zolpidem, such as ambien. Allergic reactions such as shortness of breath or swelling of your tongue or throat may occur and may be fatal. Inrmezzo should not be taken if you have taken another sleep medicine at bedtime or in the middle of the night or drank alcohol that day. Do not drive or operate machinery until at least 4 hours after taking intermezzo and youre fully awake. Driving, eating, or engaging in other activities while not fully awake without remembering the event the next day have been reported. Abnormal behaviors may include aggressiveness, agitation, hallucinations, or confusion. Alcohol or taking other medicines that make you sleepy may increase these risks. In depressed patients, worsening of depression, including risk of suicide, may occur. Intermezzo, like most sleep medicines, has some risk of dependency. Common side effects are headache, nausea, and fatigue. So if you suffer from middleofthenight insomnia, ask your doctor about intermezzo and return to sleep again. And return to sleep again. Ive got two tickets to paradise l set . Pack your bags, well leave tonight. Uhh, its next month, actually. Eddie continues singing to tickets to. Paradiiiiiise no four. Remember . Whoooa whooaa whooo you know ronny, folks who save hundreds of dollars by switching to geico sure are happy. And how happy are they jimmy . Happier than eddie money running a travel agency. Get happy. Get geico. Fifteen minutes could save you fifteen percent or more. It is time, its time for the lightning round on cramers mad money. Rapidfire calls. You say the name of the stock, i tell you to buy or sell. Are you ready skidaddy . Time for the lightning round on cramers mad money. Max in new york . Caller booyah, baby. Booyah back. Caller research in motion. Rimm. Im not against it, im going to say dont buy here, but 15, you want to pull the trigger because it will be perfect there. Lets go to good, lets go to john in florida. John . Caller hey, jim, greetings from florida. My question is net suite, i got in at 23. I like these cloud plays, i like salesforce. Com more than that one. Jeannie in pennsylvania. Caller i need a sweater for winter, ati no, the downgrades are so powerful, i have to believe theres something wrong with stainless steel. Lets go to john in illinois. John . Caller booyah, jim, thanks for taking my call. Calling about rlgy, realogy. Okay, that is the best real estate play i know that is not linked to actual housing, and i want to own the stock. I hope it pulls back, but it doesnt, realogys good. Gary in south carolina, gary . Caller jim, congratulations on your super show. Thank you. Caller my stock is mattel. Hate to buy a stock at a 52week high, but if it falls under 35, you want to own it. Inexpensive with a good dividend. Joe in florida. Joe . Caller hey, jim, thanks for taking my call. Jcp, jc penney bondholders, is bankruptcy on the horizon . The preferred hangs in there. The preferred hangs in there. I dont want to own the stock. I need a reason to own the stock besides the fact it might not go bankrupt. And that, ladies and gentlemen, is the conclusion of the lightning round. The lightning round is sponsored by td ameritrade. [ [ female announcer ] eggo waffles are a great way to get your family together for breakfast. In fact, they might work too well. [ ding ] [ shuffling, scooting ] [ clears throat ] [ children laugh ] [ female announcer ] golden, crispy outside. Warm and fluffy inside. We are one goodlooking family. [ children laugh ] [ female announcer ] eggo waffles. Simply delicious. I have a cold, and i took nyquil, but im still stubbed up. [ male announcer ] truth is, nyquil doesnt unstuff your nose. What . [ male announcer ] it doesnt have a decongestant. No way. [ male announcer ] sorry. Alkaseltzer plus fights your worst cold symptoms plus has a fast acting decongestant to relieve your stuffy nose. [ sighs ] thanks [ male announcer ] youre welcome. Thats the cold truth [ male announcer ] alkaseltzer plus. Oh what a relief it is [ male announcer ] to learn more about the cold truth and save 1 visit alkaseltzer on facebook. Ive always said if you want to take the temperature of the entire tech sector, then the best thermometer is avnet. I like to think of it as the largest super market of technology on earth. The largest distributor of electronics and Information Technology hardware, over 100,000 customers. When come out this morning and shoot the lights out with a spectacular quarter, thats a big deal, especially since a few short months ago, the hardware side of the tech business was in bad shape. Yet today, avnet delivered a stupendous 18 cent earnings beat while the revenues up very slightly came in substantially better than expected. Company hitting pretty darn bullish guidance for the next quarter too. The strength was in north america where avnet sales were up from the prior quarter and europe, the middle east, and africa, which was up a staggering 52 . Stock of course immediately soared 2. 23, more than 6. 9 today in response. Avnets given us a 21cent gain since we told you to buy the stock. Lets talk to the ceo of avnet, who told us last time the stock was just too darn cheap. Find out about the quarter and what it means for the industry. Welcome back to mad money. Thank you, jim. Appreciate it. Glad to be back. The first thing people said to me when this number came out other than thank you for telling me to buy it, was now, he was on october 26th. How can things snap back . What happened in the country . What happened in the world . What went on that six weeks later things were better . Jim, im not sure i can explain the whole world picture, but i can tell you about our business here. If you remember that october interview and that september quarter, we talked about the cautious tone from our customers both on the components and computer side of our business. We set expectations below normal seasonal guidance out of respect for that environment. And what really happened, the sequential story is very, very strong. The numbers you talked about t even organically speaking, we included some m a, but t even organically speaking, we were ahead of normal expectations, particularly i. T. Business. And what i would tell you is there was certainly a factor of that delay and deferral we talked about in september that actually came in strong in december. Well, look, you go over the Conference Calls pretty extraordinary. You talk about europe. You say a lot of its eastern europe, uk and germany. I mean, there had been weak demand for two years, but demand grew 20 . How is that possible . No, it was somewhat aided by a recent acquisition we closed early in the quarter overall. What i would tell you is on an organic basis, our european computer business is still down double digits yearonyear, though. Thats fair, but you did say positive things about how this months going. For your company and also that inventorys low, which i think is a great tell of 2013. Well, we were very proud of the cash flow for the quarter and, of course, the reduction in inventory contributed that overall. As i said, jim, i couldnt be prouder of the team. The way theyve responded, we always ask them to do the right things over time. And in addition to adjusting our expenses, which we talked about on that october call, we also look at that working capital. So to be able to absorb and be able to support this upside growth in revenues, havent dropped through leverage on the bottom line and still work on that working capital. Its still making sure were in a position to service those customers as they expect from avnet, could not be prouder of the overall job the team has been doing. When you were on, you had said, look, the stock got to the high 30s, it wasnt the right level to buy. When you came back on, you said, listen, now our stock is cheap. And, sure enough, i have you buying 2 1 2 million at 28 during this quarter. Thats right. You had faith the company would come back even though the order book wasnt there. You knew the company had an innate strength you had to take advantage of as a cash flow man. We felt we had we were a compelling investment value, and jim, out of the 750 of total authorization and buyback that weve authorized since august of 11, weve spent about 525 million of that, 225 still dry powder, but weve acquired that as you said at about an aggregate of 28 a share. And that looks like a pretty good investment right now. Look, a company could be a customer, its another company, but apple was down really big today. And i know a lot of people are asking me, look, avnet can snap back. Can every company in Technology Snap back . If they have the right combination. Well, our exposure, remember, is in that broad industrial customer base. And for the last couple of quarters, while apple was doing so well, we looked like we were a little bit out of sync in those particular quarters and perhaps now as the more of the Digital Consumer products have a little bit more of a letdown and theres more competition there, were trying to make sure we understand whats going on with that broad base of industrial customers that we service and our guidance would suggest there we had a positive book to bill and components off the december quarter and we dont want to overplay that into a big call. Because there are still major questions on our mind about the overall macroeconomic situation were dealing with. But we dont want to at the same time, we dont want to downplay the fact there were some encouraging signs out of the Second Quarter in addition to the headline results. One last line, our americas region, which grew Pro Forma Revenues 36 , sequentially achieved well above seasonable growth as our data suggests many other products delayed at the end of september were completed in the december quarter. What would have been delayed at the end of september that got completed in the december quarter . Jim, our thesis is pretty much built on the premise that a lot of those i. T. Budgets get reset at the end of the calendar year. In other words, youre a cio, youre talking with your ceo, youre going to spend the money, you decide to defer in september and let it slip into december. If you dont spend it in december, you might not have the budget in january. So part of our thesis is that as opposed to deferring in september, december may have been more a little bit of influence of use it or lose it mentality that helped contribute to the big sequential increase that we saw. Well, they certainly spent on you and you spent buying the stock and did a terrific job. Congratulations, rick hamada, the ceo of avnet, great to speak with you. Some Companies Know their own business, and occasionally their own stock, and avnet is one. What a great opportunity to buy at 28 when he told you you should, you should because he was buying it for the company himself. Mad moneys back. [ washer and dryer sounds ] for the things you cant wash, freshen them with febreze. Because febreze doesnt just cover up odors. It penetrates deep into fabrics to eliminate odors and leaves a light, fresh scent. Just another way febreze helps you breathe happy. And leaves a light, fresh scent. I played a round of golf. Id in the last five hours . Then i read a book while teaching myself how to play guitar; ran ten miles while knitting myself a sweater; jumped out of a plane. Finally, i became a ping pong master while recording my debut album. How you ask . With 5hour energy. I get hours of energy now no crash later. Wait to see the next five hours. N change your life. My fourth grade teacher mrs. Hoffman encouraged me to fulfill my potential. She wrote in my yearbook, one day youll be the star of an awardwinning show on nbc how did she know that . The more you know. My birthdays coming up in a couple of weeks, and my youngest daughter wants ideas, lists, shes really into giving the right presents and, of course, receiving them. So when she asked me what i wanted, i told her i wanted the first seasons dvd of sons of anarchy. Everyone tells me its like hamlet. Practically a remake. Shakespeare is second of all to stephen king. She texts me back immediately. We ceased to communicate by actual speech a long time ago, but i believe i would recognize her voice if she called. She texts me back, she isnt going to buy me the dvds because it streams on netflix. Memo from me to you. Anytime whatsoever a teenager is worried about spending your money, sit up and take notice. My daughter swears by netflix, even more than apple. I should have figured that after all that they gain all these new it mean, have you bought a new television . Even the most dubious quality television, they come with netflix right on the clicker. Can you believe that . No wonder they rallied huge, up more than 43, 42 , especially when you consider the company on its Conference Call ruled out an Equity Offering to pay for that new content. The short sellers were hoping it would go down, they would do an underwriting, be a big dip, forget about it. Its not going to happen. My daughters the one who told me shes been buying things off of facebook lately. She nabbed an rhcp tshirt. I thought it stood for russian head of the communist party. It is the red hot chili peppers. When zuckerberg said the company screwed up mobile and is now getting it right, i went positive on facebook. Shes the one that turned me on to apple years ago at 50 because she wanted the second ipod. As a fashion accessory. But alas, she and her sister are the reasons why i had to cool on apple recently because they didnt want any of the new stuff and are still angry about the cord and the maps app and the new itunes. Her sister wanted to know if twitter was public because she loves that, i dont know if she follows me jimcramer. Which brings me to the takeaway here. Right now, there are companies that have no appeal at all to the Younger Generation. We saw with coach and tiffany the other day, two older, out of touch brands my kids arent interested in, my daughter has a retro coach bag. No more interested than theyd be in shopping at jc penney, using microsoft software, driving a gm car. Yet, if youre going to win the Younger Generation and you must because its a generation that will soon have the purchasing power, a generation that is much smarter than we are, you need to talk to kids like my kids. And they now think that apples old. Not repulsive like a hewlettpackard, not repugnant like a dell, just old. That could change on a dime. All apple would have to do is go buy twitter or netflix or even linkedn, developing quite a following among younger people joining the workforce. They could buy all three and get their mojo back because that would be putting them in touch with what younger people want. Netflix knows the Younger Generation better than most people think. Apple used to know. They used to know. Now netflix, they know binge viewing. Nonappointment tv and shows that will be hits Like Arrested Development which is one of the reasons netflix can soar 43 on a 13cent profit and apple can plummet on a gain. Its a lesson that apple had better Pay Attention to if it ever wants to get back in touch with the next generation and what they truly want. Even as it seems theyre more sure than ever of their hip status. Stay with cramer. And. Done. Did you just turn your ringer off so no one would interrupt us . Oh no, i. Just used my geico app to get a tow truck. Its gonna be 30 minutes. Oh, so that means that we wont be stuck up here, for hours, with nothing to do. Oh i get it, you wanna pass the time, huh. holds up phone fruit ninja emergency roadside assistance. Just a click away with the geico mobile app. Im up next, but now im singing the heartburn blues. Hold on, prilosec isnt for fast relief. Cue up alkaseltzer. It stops heartburn fast. Oh what a relief it is all right. I want apple higher. My Charitable Trust owns it. Theyve got to do a deal, big buyback, huge boost in the dividend. Theyve got to make that cash hoard work for you if youre a shareholder, and then its fine