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Mar.10
9:48 PM ET
Tuesday, 10 Mar 2009
Mad Mail: Will Housing Still Bottom This Year?

Jim: You are extremely mistaken in saying stay away from Activision Blizzard [ATVI  Loading...      ()   ] and go with the big dogs. I am assuming that you are referring to Electronic Arts [ERTS  Loading...      ()   ] here. They own Guitar Hero and Call of Duty, the two leaders in the field currently. Most importantly, after completing their merger with Blizzard, they now own online games such as World of Warcraft, which has 11.5 million subscribers paying some $10-$15 per month to play online, generating huge cash flow for the company. The company already has $3 billion in cash with no debt, and a $1 billion stock buyback in place. --Mike

Cramer says: “I’m not recommending the big dogs. I did like at one point GameStop, but I don’t like retail. Look, you bring up some good points. I recommended it for a trade a couple years ago, we made good money, I never looked at it again. I don’t like the gaming business anymore. But you know what? I read your e-mail because I thought it sounded interesting enough that people should take a look at it even if I don’t like it.”

          ___

Jim: Everything is bad, we know that and there does not seem to be a short-term fix that anyone in the administration is willing, able, or even knows how to offer. Accepting that, for now, I would love to see a show or portion of a show that prepares us for the coming inflation and how best to protect us against it. Can you please tell us what to do now to protect us in the future? --James

Cramer says: “It’s why, even though I said gold’s going down, that I want you to buy gold into the weakness. Because I fear one day that inflation’s coming back. Every portfolio should own a little gold. That is the protection.” 

          ___

Jim: Cisco Systems [CSCO  Loading...      ()   ] has spent billions on its stock buybacks over the years and sits on about $29 billion in cash as of the latest report. Most of the buybacks have just covered the huge stock giveaways to directors and employees. A measly 10 cents a quarter would cost the company $2.3 billion per year and yield 2.6% based upon last week's closing price. Time for you to get after John Chambers. He is no better than the others you mentioned on last week's buyback show. --Chris

Cramer says: “I have not been happy with Cisco’s buyback. I wish they would have a dividend. I do believe in the company and John Chambers. I own it for my charitable trust. But I do believe that they should not be doing the buyback and they should be doing a dividend. And maybe that’s enough to sell it, but I don’t think so.”

          ___

Jim: Tata Motors [TTM  Loading...      ()   ] is about to roll out the Nano, known as the cheapest car in the world, on March 23. With the volume of people in that part of the world needing cars, do you see this stock moving up? Also, it looks like TTM is has an accidentally high yield right now. --Mark

Cramer says: “I recommended TTM. I had a really good trade. I never looked back. I’m not going to recommend any auto companies on this show. There’s too much risk.”

          ___

Jim: 60 Minutes did a segment a few months ago saying Alt-A and interest-only loans still need to adjust in 2009 and 2010. If the rates of default are high for these loans, will it impact your call for a housing bottom in July? --Aaron

Cramer says: “I am counting on the administration to do a lot of things beside what they’ve already done to make it so that housing is more affordable. And I do not believe that the Alt-A, interest-only loans are going to impact my call for the bottom. I don’t believe it because I think that so few homes are being built, there is so much demand when housing comes down in price, and the government’s going to make mortgage money so plentiful that I think we’re going to chop right through the supply.”



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