[Beginning of Cramer's verbatim comments for this segment...]

Note:          In this segment, Jim places Irene Rosenfeld, CEO of Kraft at the top of the Mad Money Wall of Shame.  We are continuing to compile these comments.

In Getting Back To Even, the latest edition to the Cramer canon... #2 on the best-seller list... yeah, I tell you to be aware of bogus upside surprises... You want to know what a bogus upside surprise really looks like?...

Just yesterday, we got one from a totally iconic American company, with an unbelievably awful management... Kraft Foods Inc. (KFT)... And that's the subject of tonight's Sell Block...

On Tuesday, after the close, Kraft reported the kind of quarter that the press calls "better than expected." Yet, surprisingly, the stock was down yesterday. This can be confusing for investors. You think that the company beat, you think it raised guidance. Isn't that what the headlines are saying?...

You can't go by the headlines...

If you look beyond the earnings per share number, you can tell that this was actually a worst-than-expected quarter. When they have these "bogus beats," you know what it makes me think of?... (Jim then played music, with the song "Evacuate The Dance floor")... Right?... Stop, this beat is killing me... Except, I think, evacuate the Kraft floor, these beats are killing me...

And it's because of this alleged "beat" that we're evacuating Kraft, we're sticking it in the Sell Block, and, are you ready, skee-Dad?... The company's just awful CEO, Irene Rosenfeld, is now officially on the Wall of Shame...

First, let's take a look at this bogus beat...

Kraft exceeded the Street's earnings per share estimates by 7 cents. But its revenue fell by 6%. The Street was only looking for a 2% decline. That's miserable. This makes me see this "upside surprise" as contrived. A real upside surprise - one that indicates that business is actually better than we thought - comes from better-than-expected revenue, the sales line, the top line... rather than things like cost cuts or buybacks...

This quarter was about as tasty as Velveeta, and Velveeta is specifically designed to be eaten after thermonuclear war... hence this nasty "Velveeta-mid" (a pyramid built with boxes of Kraft's Velveeta cheese), because Velveeta's solid and tasty as a brick.

Now, not only did Kraft give us a bogus beat, it also came through with a totally misleading guidance boost too. With just one quarter left in 2009, Kraft "raised" its full-year earnings guidance by 4 cents. Remember, that's after beating the 3rd quarter estimates by 7 cents.

So what was Kraft really doing?...

It was effectively guiding down for the 4th quarter... despite headlines like, "Kraft profit falls but co. raises outlook for year"... That came from the Associated Press. The numbers implied that Kraft will earn 41 cents in the 4th quarter. That's 7 cents below what the Street is expecting. There's more going on here than just misleading headlines.

Kraft is in terrible shape. Its fundamentals are declining. And the more I see it, the more I think it's botching its attempted takeover of Cadbury. Kraft is losing market share and, for this kind of company, success is all about the war for shelf space in the supermarket. It's a slow war of attrition, fought for feet, and even inches, of space and, right now, Kraft is losing. According to Nielsen, Kraft gained or held market share in only 34% of its U.S. retail business. That's down from 45% a year ago. It has gone from bad to worse, people. If you want to own a food stock, go buy General Mills Inc. (GIS) or Kellogg Co. (K). Sell Kraft.

At this point, I'd go so far as to say that the bullish thesis for Kraft rests entirely on its successful buyout of Cadbury... an acquisition I don't even approve of. I thought Kraft should have gone with a health food stock like The Hain Celestial Group (HAIN). And it's looking less and less likely to me that Kraft will be able to pull this takeover off in a way that's good for Kraft shareholders. Kraft's initial bid was rejected by Cadbury, and now the company has until Monday to make a formal offer. Given the fact that the stock - its stock - has fallen since its initial bid, and its disappointing results, I think the deal is going to be much harder to execute than it could have been. Plus, Kraft has tough conditions that might simply not allow it to satisfy Cadbury shareholders, especially given the good results that Cadbury delivered in late October. Let's just say the aroma of Cadbury, as represented by this delicious fondue, can't disguise the stink of Kraft Velveeta fondue. I don't think these two necessarily mix.

There's a great article in today's Financial Times about how Cadbury's board met yesterday to discuss Kraft's results. Here's the sentence that jumped out at me... "Kraft led people to believe it would have good results and then it did not. This could anger its shareholders... they would have to be brought back onside"... meaning, in addition to having to convince Cadbury shareholders, Kraft's management now actually will have to convince its own shareholders that the deal is a good idea.

Kraft has made itself into, very simply, a sell, sell, sell... and someone needs to bear the blame for the decline of this once-proud American institution, and that person is none other than Irene Rosenfeld... who has been Kraft's CEO since June 26th of 2006. That's enough time to make a difference. At that time, the stock was at $31.

With Kraft now trading at $27.03, the stock's off 13% since Rosenfeld took over, and things aren't improving. They're getting worse. Now I did grant Rosenfeld clemency back on June 10th, even though she'd been nominated to a position on the Wall of Shame by many of you homegamers. That, in retrospect, was a mistake, and it's one that I am now correcting. In America, double jeopardy is illegal, but not in Cramerica. We're taking a distorted page from Honest Abe's second inaugural, with malice toward all and charity for none... especially none who produce bogus upside surprises, where we want to evacuate the Kraft floor with phony guidance boosts... putting Irene Rosenfeld on the Wall of Shame, where she belongs. Hopefully, she'll resign. It would be the best thing she could do for the stock.

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Bottom Line:     Don't be fooled by the headlines. Kraft Foods Inc. (KFT) reported a disappointing quarter. It gave disappointing guidance. These bogus beats are killing me. Evacuate the Kraft floor right now.

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