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[Beginning of
Cramer's
verbatim
comments for
this segment...]
Jim: I
know that I have
been talking
about the
wonders of the
mobile internet
tsunami ad
naseum… but
believe me, I am
not trying to
make you sick to
your stomach… I
m trying to help
you make money…
and there is no
doubt that this
trend for owning
a smart phone
like
Apple (AAPL)’s
iPhone,
or
Research
In Motion (RIMM)’s
Blackberry, has
gone from being
a luxury to a
necessity… and
that makes it a
game changer…
but tonight it
is time to throw
one of the
mobile internet
plays that I
have mentioned
over and over
again, under the
bus, and off the
wagon… and into
the sell block…
I am talking
about
Palm, Inc. (PALM).
Ever since I have
started beating the
smart phone drum… I
have mentioned the
iPhone,
the Blackberry, and
the Palm Pre
practically in one
breadth… as examples
of this huge new
tech product cycle…
but that does not
mean that the stocks
are in any way
equivalent these
days… not after some
of these runs… and,
in fact, the
products do not even
come close to be
equivalent… there
may be enough room
in the market for
the iPhone… the
various different
Blackberries… and
the Palm Pre… but
that does not mean
all smart phones are
created equal… some
are way more equal
than others… to
pilfer a sentiment
from Cramer fave
George Orwell.
I have been bullish
on Palm… so far it
has been a good
call… but I think
that if you own it…
I think the time has
come to take
profits… again, we
know that you can
have more than one
smart phone to be
bought… but there is
only room in your
diversified
portfolio for one
smart phone stock…
and I think that
play is
Apple Inc. (AAPL)
… no, it is Apple
without a doubt…
obviously Apple is
the better company
with the better
product… I do not
think that anyone
would argue that
point… the new
iPhone 3GS which
launched two weeks
after the Palm Pre,
is so much better…
that comparing the
two smart phones is
like comparing
apples to this fake
apple… you know, the
ornamentation kind
that you never want
to make the mistake
of biting into.
The new iPhone sold
more than a million
by the third day
after its launch…
and when Apple
reported this week,
it said that it had
been unable to make
enough of the phones
to meet the demand..
I call that, a high
quality problem… the
rave reviews, the
new iPhone operating
system, and the
whole iTunes
platform behind the
iPhone… including
the App Store… which
is perhaps the best
illustration of the
strength of the
mobile internet
today… next to what…
what does
Palm, Inc. (PALM)
have… I mean really,
what does Palm have
other than this fine
ornamental apple…
and for a
comparison, I have
got another one… I
am not even going to
go into the fact
that Apple has a
computer business
that is pantsing the
competition… and
exceeding
expectations despite
the slowdown…. and
how about the cash
cow iPod business…
Apple is the king of
the mobile internet,
and I think it will
go to $200 because
of phenomenal
increase of gross
margins… I am
praying that it will
go down tomorrow off
of Microsoft and
Amazon so that you
can buy some… really
I want you to do
that… you simply
cannot make a
comparison between
Apple and Palm.
In fact, the only
category that I like
Palm more than Apple
is the take over
prospects… Apple
obviously not going
to be taken over, it
has a huge amount of
cash, about $30 a
share… but I don’t
think that they are
nearly as a great,
the take over
prospects, as the
chatter would have
you believe… and by
the way, we never
recommend stocks on
the basis of take
over speculation
when we think the
fundamentals could
be deteriorating.
We still do not have
any official sales
numbers for the Pre…
but the current
evidence isn’t
exactly encouraging…
as it seems that the
new iPhone has
already won the
summer smart phones
slug fest… remember
all the hype and
enthusiasm when the
Pre came out… 6
weeks later the
thing is barely in
the news… and
Barkley said that
the demand for Palms
newest smart phone
has seriously
tapered off in July…
there has been
numerous complaints
from customers about
the Pre’s software
platform… and its
crummy hardware… not
to mention reports
of large returns of
the products… very
controversial here…
in fact, the analyst
who covers the stock
for Jessop and
Lamont, indicated
that the return rate
for the Pre could be
as high as 405...
look, that is
absolutely awful…
that is just their
number, it is not my
numbers.
Let’s not forget
Sprint Nextel Corp.
(S),
a company without
the heft of
AT&T (T)…
who by the way
reported a great
quarter because of
the
iPhone…
is the Palm backer…
which means less
marketing juice in a
business where
marketing matters
tremendously…
because you have to
subsidize the heck
out of these phones…
the story is not
that Palm vs. Apple,
is like David vs.
Goliath… the real
issue is that
David’s sling had
hardware problems…
he probably should
have returned it to
the Sprint store
before even getting
into the arena.
Look, here is what
it ultimately comes
down to… the Pre was
supposed to be
Palm, Inc. (PALM)’s
future… and given
that it doesn’t look
like it is living up
to the hype… I do
not see how it makes
sense to keep owning
this stock… I just
don’t… sure Palm has
a new management
team… took a CEO
straight from
Apple Inc. (AAPL)
… but remember where
this company was
before the Pre came
out… it had been
left for dead… it
was road kill… its
products not even
included in analysts
smart phone market
share tables..
because it sales
were barely a blip…
Palm had a stagnate
portfolio… and a
stock price that
sank as low as $1.14
on December 2nd… as
investors decided
that the company
would not make it.
Now, Palm has made a
come back… and its
stock should
probably never have
gone that low in the
first place… but get
this, it is up an
astonishing 1142%…
and it is up 360%
since it began the
year at $3.07.. the
stock peaked on June
30th at $16.60, just
a couple of weeks
after the Pre was
released… and it has
been mostly down
hill since then… but
there are still a
lot points to go…
right now I look at
Palm and I look at a
one hit wonder… by
the way, I am not
focusing on the no
hit wonder that we
saw earlier with the
White Sox… the one
hit, the Pre, is
looking less and
less like it can
justify that kind of
run up in the share
price by the day.
▼ ▼
▼ ▼
▼
 The Bottom Line!:
Here is the bottom
line… look, you do
not need me to tell
you that the
Palm, Inc. (PALM)
is no
Apple Inc. (AAPL)
… it is a
speculative mobile
internet play with
one big product… the
Pre… that is turning
out to be less
impressive than we
thought… Apple is an
investment… Palm was
always a trade… and
that trade has now
as of this moment
run its course at
$14 and change…
which is why… the
way I see it… Palm
belongs in the sell
block… and Apple is
still a buy, buy,
buy.
[verbatim recap]
[end of segment]
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