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In a 24-hour period that saw heads roll in the corner offices of Starbucks and Bear Stearns, two other companies – Sallie Mae and Krispy Kreme – canned their bosses to somewhat less fanfare.
The student loan giant and doughnut maker have one important thing in common, according to Cramer: Both are broken. And neither can be salvaged, no matter who is in charge.
Cramer doesn't think it matters that SLM [SLM
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] just brought in Anthony Terracciano, one of his all-time favorite turnaround artists. SLM's business has been crumbling ever since Congress approved profit cuts for its federal loans. But Cramer's wouldn't bet that on the business of federal student lending being profitable anytime soon. SLM would need to repackage its loans and sell them as bonds to get anywhere – but the default rate is too high for that. Its hands are tied.
And as great as Terracciano may be, he's only coming on as chairman. CEO Albert Lord, who presided over that tense conference call last month – is staying put. Cramer would feel slightly better if Terracciano replaced Lord outright, but the company's problems are so grave that it probably wouldn't even matter, he said.
Sallie Mae was once for sale but the deal fell through and then the law is changed, making it so there's no reason for anyone to take out this company now. Until SLM can raise money – which is going to be tough considering it's losing it now – the stock is dead in the water, as far as Cramer is concerned.
Meanwhile, Krispy Kreme [KKD Loading... ()
] is sinking in the same boat. Dunkin' Donuts has taken KKD to the cleaners, wrecking its brand name. KKD has to continue to close stores that are hemorrhaging money, it's seeing decreasing sales and it still has no real earnings. So the news that CEO Daryl Brewster would step down is, in Cramer's mind, not enough to resurrect this stock. When it comes to SLM and KKD, management shuffles don't matter. The way Cramer sees it, the right response is simply to sell.
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