Note:    During the two week period, 8/11-8/22, Jim Cramer's 6pm show has been replaced by Olympic games' coverage. Therefore, CNBC is airing special abbreviated half hour segments, called "Mad Money At The Half"... as well as the normal Mad Money, full-hour shows, at 11pm.

Given this later schedule of only an 11pm showing, all full show recaps will be posted as soon as possible on the following business mornings.
 

Beginning of the 1:30pm show comments...

Introduction:

Jim:   Hey! I'm Cramer... and, yes... It's 1:30pm... I'm going to talk to you about an afternoon delight!... I'm doing the same darn show I do every night! I do not care that it is at 1:30pm... And, for the next two weeks, I'm coming to you live with this... with my calm, centered... my statesman-like person...

Now, you'd better get ready for the best two weeks of your life, so let's make some Mad Money...


Three stories... three stories in the naked city are controlling this market today...

First, the endless pummeling in oil... you think that one's done? No... And you know I think it's going to go lower. I was using a $110 (price per barrel) floor on my regular show. I don't even know if that can hold anymore. It feels like the floor of a building after a big chemical fire...

Now, the concomitant rebound... in retail... and that reflects the $3.50 price at the pump... that I think you'll be getting in two weeks...

And then there's the incredible bank stock rally...

Let's talk about that... let's talk about the latter for a moment... Because, c'mon... that's what this market's really about... even more than the decline in oil... because it is at the fulcrum at what is going to be going right with the market, but what's supposed to be going wrong... It's supposed to be killing us...

I read the papers everyday... I mean, God... No, actually, I've got to stop reading the papers... It's too negative...

I can't take it. If you listen to the bank bears, everything's worse than it was four weeks ago... The losses are increasing... the auction rate preferreds... Hey, how horrible is that? They're biting...

How about the mortgage implodameter?... now a measure of how many homebuilders are going under... German banks are repossessing Vegas vanity projects... Freddie Mac... Money is not their fault... that they didn't compromise standards...

I mean, haven't things just gotten worse and worse and worse?... To which I say, uh, let me give you some evidence that would probably suggest otherwise...

I'm giving you some July 15th lows, when I said that was the bottom... versus where they are now...

Ambac (ABK)... $1.70... that's where it was. Now, it's at $4.19.

MBIA Inc. (MBI)... remember that one? Wasn't that like in the "do not resuscitate" list?... $3.90... $8.70.

Oh my God... Wachovia Corp. (WB)... $8.90... Now $18.60...

Bank of America (BAC)... Before, at $18... Now, $33...

Fannie Mae (FNM)... yes, FNM... was at $6.90. Now, that's at $8.30...

Freddie Mac (FRE)... fried Mac... $4.05... Now $5.89...

How about this one?... Wells Fargo (WFC)... $19 bucks... Now $31 bucks...

Oh my God... Lehman Brothers (LEH)... It was at $11... Now it's at $19.50...

Even lowly worm, Washington Mutual (WM)... $3... Now $4.08...

And, get this... Citigroup (C)... I mean, wasn't C supposed to be down really, really big on the auction preferred?... $14 bucks... Now $20...

Incredibly, even American International Group (AIG)... which is outrageous... and I'll follow up on that at the end of the show... $20... Now $24...

Now, when I made my bottom call two weeks ago... which, of course, was disparaged, because I am deeply hated... I was simply speaking that we would not violate those levels...

There's a host of other commodity-consuming companies' levels that also hit bottoms at the same time, with a peak in oil, that I also don't think will be violated... retail... restaurant...

My evidence doesn't say that things are going to work... I believe that Fannie Mae (FNM) and Freddie Mac (FRE) will have to be bailed out...

And, how about this?... The Federal Government crushing the common (stock), contrary to what the regulars are saying...

I do believe that Washington Mutual (WM) may not have enough money to get by...

I do believe that American International Group (AIG) will have to do another gigantic financing... more on that later...

I don't think that General Motors (GM) or Ford (F) common shareholders will necessarily will have any more to show for it during this year than the Sirius XM Radio Inc. (SIRI) shareholders have in the end... and, yes, I'm talking that too...

I do believe that housing will not bottom, until the end of 2009... even though I was sucker enough to buy a home, but I had to... I was renting. I do believe that one or two of the major homebuilders will go under... It hasn't happened yet...

What I'm saying is... that there are so many reasons to look bearish... and it ain't working...

I am simply saying that, despite all those negatives, I do not believe that we will take out the July lows... because we should have by now, right? We haven't...

Instead, we've seen commodities collapse... inflation collapse... and the Fed even has the ability to cut if it wants to...

Merrill Lynch (MER)?... Refinanced...

All right, let me give it to you in little bottom line...

.  .  .  .  .

The Bottom Line!:    What I'm saying is, despite everything that you read in the papers, we haven't collapsed yet... And, if we haven't collapsed yet... well... when will we?... Maybe we won't at all. The July 15th bottom stands. That's why I like it...

.  .  .  .  .

GETTING SIRIUS...
Sirius XM Radio Inc. (SIRI)

There's a stock that many of you own... It's a stock that I'm asked about the most... It's a stock that appears to have been... Well, it has hurt people... and yet, the product is a loved product... So we've got to deal with the notion that you can have a loved product and a bad stock... and whether they ever meet... Where's the twain meet?...

SIRI... That's it. Mel Karmazin is the CEO, and we're going to find out what the heck is going on...

Jim: Okay, it took 1 year and 158 days... and it was overdue... And, when I look at your financials, Mel... I think that the FCC... not me, not Jim Cramer... but the FCC cost you a billion dollars...

Mel Karmazin: That's not the way I look at it, okay... I guarantee you Dish and DirectTV would have liked to have the merger done, so the fact is that it took a long time... it shouldn't have taken this long... but it was worth waiting for, because I think that these companies today are going to capture the values and you're going to see the stock improve... You know, I can't control the stock. I can only control the company, and we are doing everything right.

Jim: Mel, how is it that a big event occurs... the event we're all looking for (the merger of XM and Sirius)... and that night, the stock goes from $2 and change to $1.50?...

Mel Karmazin: In order for to close the merger, we needed to finance $1.25 billion. The week before, we went into the debt market, and wanted to raise $400 million, and we raised $700 million. The last $500 million needed to come in the form of a convertible bond... and it needed to come the day we closed, because we couldn't close it in escrow...

Jim: Meaning, you didn't want anyone holding the deal up...

Mel Karmazin: We knew that the NAB was going to try to get a stay...

Jim: Meaning the National Association of Broadcasters, who hate you... I mean, they just like hate you so much. They hate you personally too...

Mel Karmazin: They hate us because of the damage we're doing to terrestrial radio, so I don't take it personally... but I don't care... But, at this point, we needed to close the merger... We needed to close it that night, and I could've taken a risk of saying, well, let's wait until the financing... We got the deal done. There were an awful lot of deals that didn't get done. We got this deal done. We raised... very ugly... we raised $1.25 billion of new money. Now, the deal is that we're focused on running the company, now that we've closed it... Do I wish the market wasn't that way when we closed it? Yeah, but what could I do? I could've closed or not closed... I took the hand that I was dealt...

Jim: All right, you have another financing that comes up... well, actually, in the winter...

Mel Karmazin: We have... to just get it totally out of the way... Next year, in 2009, we have three pieces... An XM convertible bond... a Sirius convertible bond... and some bank debt... We've already discussions... We think that the sooner we put those issues behind us, we can focus on the fundamentals...

Jim: But Mel, I have traded convertible bonds in my life... and what I would do is, on a ratio, short as much common stock as I can in order to take out the risk of any sort of default, and own the convertible bond... You have to get the stock to $4 and change, in order to block me from doing that...

Mel Karmazin: The thought of a default is ridiculous... but you can predict anything you want...

Jim: Well, you know, if you're a convertible arbitrager, you don't really have that choice... You lock in the yield, and make sure you don't have a big principal risk...

Mel Karmazin: I need to deal with what's out there... So, are people, arbitragers, out there playing games?... All we can do is to grow our free cash flow, get the stock to reflect our value and, if we screw people along the way, because they bet against us, that's they're business.

Jim: Okay... I like that. Now, Goldman Sachs, who just despises you...

Mel Karmazin: So why... I don't mind you doing that... but there are 20 analysts out there. One is out there with this viewpoint. You don't have the guys out there with the $6 (price targets)...

Jim: Listen, if you're stock was at $20, I'd be focusing on these guys... Those guys are guys who all thought you'd be at $20... Here's a guy who says you should be at $1, so he's got credibility...

Mel Karmazin: So, they think that we're worth $4 billion. There are other people out there who believe that we're worth over $12 billion... so we'll have to see... He has been working with the hedge funds for an awful long time...

Jim: Meaning that you think that he is in league with people who would like the stock to go lower, which is a serious charge, but that's okay...

Mel Karmazin: In my humble opinion, I know what kind of reports he has written. He's entitled. It's America... I support it.

Jim: But he does say that you're going to have a very difficult time selling retail in the next four months, because nobody knows which radio they should buy. That's been a very important market for you...

Mel Karmazin: And Jim, that's what we're going to focus on now... now that the merger has taken place. When I joined the company, we had $67 million of revenue... $67 million. We have $2.4 billion of revenue. That is our run rate. We've talked about the efficiencies of the merger and how, with the efficiencies of the merger, we're going to have positive EBITDA next year...

Jim: 400, but you've not talked about this year. You've given us no numbers for 2008.

Mel Karmazin: Because this year, we've just got to XM. We just found out what is at XM. We're going to give... We said, right after Labor Day, we're going to have conference calls for investors, so we can tell them what's going to happen in '08 and give them more color for '09...

Jim: Okay, you've been fair in answering the tough questions... I have both Sirius and XM... I have them in two different cars, because I'm a huge believer in both, and they wouldn't let me have it in one car... I want to listen to Howard (Stern - on Sirius), but I also want to listen to (Major League) baseball (on XM)... What are my options?...

Mel Karmazin: So, right now... we love what your option is... You pay $25.90 a month, and you get both of them... But, if you don't want to buy both of them for $25.90, you'll be able to get Howard this fall... and you should assume one of our promotions that we'll have at retail this fall is promoting the best of Sirius on XM, and visa-versa... That will be stimulating sales at retail this fall.

Jim: How much quickly fat take out... You've got some really... I've been to the studios... I mean, you guys are living large...

Mel Karmazin: I started taking it out on the 29th of July... the day I was in that building. So, we have already named an Executive Committee... we have already terminated, unfortunately, a number of people. We're already eliminated a number of contract work... We're on the way right now to delivering that EBITDA and free cash flow.

Jim: Their car business is terrible... I know you're also trying to get the used cars to activate, but they have no interest... those dealers don't have any interest... Why should we not worry about a $12 million car build... which I know you do address, but I wanted to give you a chance...

Mel Karmazin: That's not accurate. The people do want a deal with the used car market... Last year, we added 5.7 million gross additions in OEM (Original Equipment Manufacturers - new cars)... XM and Sirius... This year - a terrible year... maybe 12 million cars produced... Because we're penetrating more models, we're going to add well over 6 million... We will add more OEM subscribers calendar year 2008 than we did calendar year 2007, even though Detroit is selling less cars...

Jim: The IPOD?...

Mel Karmazin: IPOD... competition...plenty of competition...

Jim: Terrestrial radio... can you destroy it? Will you destroy terrestrial radio?...

Mel Karmazin: No, we're not going to destroy it...

Jim: Why not? You're supposed to say yes... darn it!... Remember the script we went over?

Mel Karmazin: AM radio will be around for a long time. You know, we will become the biggest thing in radio... Tell me one company in the audio entertainment business that you like better than Sirius?... Who has $2.4 billion? Who is growing revenue 25%?...

Jim: I don't, I don't...

Mel Karmazin: So you pick a company in this space that's better than us... Do we have competition? Yeah. Do we have challenges? Yeah.

Jim: All right, I've finally got the Phillies (Philadelphia baseball team) and the Eagles (Philadelphia football team)... That's what I've always wanted. And, of course, Howard...

Mel Karmazin, you're fair... I had to hit you hard, because people think I've cost people money on this. I know you wanted this deal done earlier... Hey, well done... Mel, thank you very much. I appreciate it.

.  .  .  .  .

THE OUTRAGE OF THE DAY...
American International Group (AIG)

Okay, everyday, from 1:30pm to 2pm... and everyday, I'm going to have an outrage...

Because there are plenty of things about this market that get under my skin...

But every single day, I'm going to pick something that really infuriates me... that's outrageous... okay?... And it's not that Target (TGT)'s up $4... or that retailers are doing great... No.

It's about something that I've read that I think is outrageous...

This weekend, because I'm a really interesting guy, I went back over the September 5th analyst meeting that American International Group (AIG) had...

And there was something that then-CEO Marty Sullivan said... He goes, "I don't wake up in the morning worried that I'm going to have to dilute the shareholders by issuing additional common equity or cutting our dividend."

They spent a full day talking about how they had almost no exposure whatsoever to what was going on. They had professors... they had a guy named Gary Borton from the Wharton School... they were starting to use a lot of models... and they said they would show no more loss than $314 million. That was about $20 billion later...

I'm furious at them, and I'm not letting up!...

[ End of 1:30 "Mad Money: At The Half" Show Comments ]