On Tuesday, Cramer tried to figure out why Google has been floundering lately while Microsoft has seemingly reinvented itself.
The mystery began last Thursday when Google reported a “big earnings miss.” The No. 1 search engine operator, however, praised itself on the earnings conference call. CEO Larry Page called it a “strong quarter,” but analysts on the call weren’t buying it. As Cramer listened to the executives’ excuses, he laughed to himself.
Microsoft , on the other hand, reported strong quarterly results. Cramer noted the technology company didn’t pat itself on the back, though.
So how can we compare these two tech companies?
To start, Google’s gross margins are being hurt by the number of people using smartphones instead of personal computers, even though executives didn’t want to admit it. That hurts because advertisers aren’t crazy about mobile and they won’t pay as much for mobile ads, Cramer explained. Microsoft said all of its iterations of the old Windows operating system are actually going to be having higher gross margins than last year. To Cramer, that’s one reason Microsoft’s stock took off while Google’s flopped.
Another thing to consider is that Google has a lot of projects going, but didn’t explain how it is going to monetize them. Microsoft is really taking advantage of its Xbox gaming system, though, and hopes to monetize Skype, which it recently acquired.
After listening to both calls, Cramer thinks Microsoft can go higher, especially if Thailand returns to full production of hard drives. He wants to wait another quarter to see about Google, though. If it can’t turn things around, it might be dead money.
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