Throughout this year Cramer has said time and again that we need to fall back on Mad Money’s 2010 investing themes, especially after a major pullback yesterday and today’s intraday 168-point drop. But it is not enough for a company just to be tied into a multiyear theme like the mobile Internet tsunami, they also need to execute properly.
When a company can’t navigate through these rough waters, Cramer said, it raises concern. For this reason the Mad Money host is taking a closer look at Aviat Networks, the company formerly known as Harris-Stratex.
Cramer first recommended this stock on Sept. 11 as a speculation play on the wireless infrastructure build-out, which is necessary to support the ever-expanding amount of bandwidth that smartphones, netbooks,and the soon-to-be released Apple iPad take up. AVNW makes microwave backhaul radios that are used to connect cell towers with the actual wireless network. This technology is less expensive than running a copper wire or fiber-optic line between two lines. In fact, Cramer said, 60 percent of backhaul connections worldwide are now using this type of connection.
Now, the problem with Aviat came when the company reported a quarter that Wall Street was none-to-pleased with on Wednesday. Cramer went so far as to say it was one of the worst he's seen this year. The company beat on earnings by a penny, but revenues came in below Wall Street’s consensus and guidance for next quarter fell short of expectations. The stock has fallen 12.5 percent from Wednesday’s closing price of $7.27. And Cramer thinks AVNW has become a playground for short sellers, with a short interest at about 11 percent of the float.
Cramer said if Aviat is having a problem with demand, then his thesis about the mobile Internet tsunami might be hurt. On the other hand, if it’s an execution issue, then that’s a different matter.
So which is it? To answer this question and more Cramer invited the CEO of Aviat Networks, Harald Braun, on the show. Watch the video for the full interview.
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