Cramer: 'I'd Love It' If Microsoft Spun Off Xbox

Microsoft owns a number of under-appreciated businesses in the under-appreciated tech sector, and the stock is cheap right now, CNBC's Jim Cramer said Monday.

"What's so interesting is that the cheapest stocks are tech. They are cheap and people want to have cheap," Cramer said on "Squawk on the Street."

"I see value in tech. The difficult thing is that if you want to sell in May, there are other people who are hoping you'll sell in May in order to get that performance."

With several Wall Street firms downgrading Microsoft shares because of expected weakness in earnings, Cramer said "it was just the opposite. They were strong. The entertainment and device business is terrific. ... I thought that the quarter was excellent."

With a new Xbox on the way, Cramer said Microsoft CEO Steve Ballmer "has changed the way that people look at that company. It's maybe late in the game for him, but I like the fact that the company has, to me, been proving the doubters wrong."

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"I like the idea that there's a 'sum of the parts' here that is much bigger than people realize," he said. With the company's cloud business and entertainment business surfacing as multibillion dollar brands, "suddenly you have to look at this company as a different animal."

"I would love, love, love a piece, if they were to spin out Xbox," he said. "Xbox plus Netflix, if they bought Netflix then you would see that this company has a lot of weapons. It's certainly better than Hewlett-Packard."

Although many still see Microsoft as a "PC company," Cramer also likes the cash position and the component businesses.

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Cramer said he sees this as an execution story, which has also helped companies like Xilinx, Texas Instruments, BMC Software and Adobe. "This is an undervalued sector," he said, comparing the group to consumer products names that are relatively much more expensive.

With earnings around 12 times earnings in tech, Cramer pointed to multiples in consumer names like Kellogg and General Mills at around 19 times earnings. He said that he would be more comfortable owning Microsoft at these levels than consumer companies at more expensive levels.

— By CNBC's Paul Toscano. Follow him on Twitter and get the latest stories from "Squawk on the Street" @ToscanoPaul