tv Mad Money CNBC October 25, 2013 6:00pm-7:01pm EDT
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>> there is support for apple. i think the stock found support here. >> looks like our time expired. i'm melissa lee for more options action check out our web site, and also, take a look at our daily segment inside fast money every day at >> my mission is simple, to make you money. i'm here to level the playing field for all investors. there's always a market somewhere, and i promise to help you find it. "mad money" starts now. >> hey, i'm cramer. welcome to "mad money." my job is not just entertainment. it's to teach. call me at 1-800-743-cnbc. this market doesn't seem to know how to quit. it's running on empty. it's on fumes.
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well, the likes of amazon and microsoft. >> buy, buy, buy. >> dow gaining 61 points. s&p rising 4%. these big capitalation companies blue chips jump up as they're junior growth stocks. once they're in orbit, they keep flying higher. 3m, boeing, honeywell. after all of these, who can back the next? i say look no further than apple. there's a lot of chatter. what apple has to do to get its stock moving higher. that's in part because carl icahn has managed to hijack the
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debate about the soul of apple. icahn wants apple to move the shares up with its own buying power. it is pretty easy. apple should stop sitting on all its idle cash and start doing something. twitter wants to come out for $15 billion. boom, i bay buy it for 20 billion. apple is not getting any credit for its cash or it wouldn't have attracted icahn to begin with. these big time port will folio managers hear one thing and one thing only. they are expanding because they are being wrapped up by the consumer. higher gross manager mean people will still pay premium products versus those of the bad guys, the competition.
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that's how you feel about it when you go up against them. this is the nfl. this is the nfl. the other guy on the other side of the field, samsung. apple needs to a nye late samsung. you hear gross margins are up, the stock is up. you hear gross margin is going down, all the cash in the world won't stop all the cash in the world. herbal life reports money after the close. you have icahn and bill ackman was building his whole hedge fund. lots of people were buying because they felt the atkins fund could be broken. atkins switched to put on the downsize on a squeeze up. at least it has a clean accounting bill of health. i think that will breed life
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into the ackman taunters and the cycle will begin a tphufplt i'm sure judge wapner will have the answers. it's the icahn show. tuesday is new economy day. yelp, do you yelp and linkdin. it representing two of the most exciting new stories that have been public in years. they need to raise the revenue forecast and might as well give the whole thing. it doesn't cost anything to listen to me. i want a three for one stock split, okay? so many opportunities for growth, i want them to raise money. this is a first, right? i want them to raise money to allow them to become the first worldwide mobile yellow pages. they are built on world domination not unlike pinky the brain and amazon.
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both meeting yelp and linkedin. you also want to pay close attention when it reports tuesday after the close. i'm concerned here. we saw numbers this week and the stock keeps coming down. we're going to see approvals for the drug. i think it will be ignoring the good news and going down. always remember i like companies who embrace the holy trinity of the social, mobile, and the cloud. that's definition of facebook. on reports wednesday, we want to hear how it will continue to monday taoeuz mobile and social, while it facts de facto to reach consumers. it has had its biggest hit this year in facebook.
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we trim back our position this week. in the last few weeks, a mammoth upside spraoeufplts i never want to hear that kind of talk. if you have a big game, particularly if you listen to us on the trust, take something off the table, okay? when you have the kind of expectation that's so high, you can have disappointment even if they do a great number. how much is left in starbucks? after this remarkable 49% run from the beginning of the year, i knew this. if you don't own the stock, i want you to wait until thursday. wait until after the quarter is announced. i think the analysts will mistakenly give ceo howard schwartz a hard time. they want crack down orem bears starbucks as they did to kentucky fried chicken, a member of yum brands.
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i say let it come down and then buy. i think 2014 will be gang busters for starbucks. i'm not concerned about china and price gouging. it's not even gouging. that's what matters. finally on value as opposed to all these other stocks i've been mentioning, g.m. china and europe have gotten better while the u.s. continues to percolate. you know what, i'm making g.m. my sweeper pick. when i pick at 4:00 a.m. when everybody else is sleeping. we hear from exxon thursday. and exxon reminds me of big phrma. exxon and merck. focus on the production, growth and replacement news. i don't see much on the front. we're i having to get better.
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we also get earnings from first solar. hey, look at that. old and new. if it out of solar city and dupont mean anything at all, both are seeing rapid growth in solar right now. if i'm right, first solar could put on 10 points. if it misses, the bears will be all over it. odds favorite. finally on friday, chevron. which is the best run of the major oil companies and the one i believe is itching to bring out value. it is a buy every time it gets hit. if oil goes down early in the week taking chevron with it, i would pick up chevron going into the quarter for a trade. bottom line. remember, these companies want to dominate the earth. it's like amazon. these are just like amazon.
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i do expect more amazons and more disappointment, more microsofts. the buy for this week, up side. paul in california. >> caller: hi, paul. thanks for taking my call. >> my pleasure. what's on your mind? >> caller: i bought illinois tours in april. 30%. what should i do now? >> i love illinois tools so much i'm blinded by it. it's still an inexpensive stock. it has a pay grade over two, which i don't typically like to do for industrials what i'm hearing from boeing, honeywell 2014 is a good year for itw. don't sell the stock. >> caller: boo-yah from florida.
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bjr. >> used to love them. what's going on? >> caller: we just got one in coral springs, and the lines were out the door. they gave me a 10 to 12-page menu. is it buy, sell or hold? >> boy, it's come down a lot. you know what, it's coming down too much. we like the company. cheesecake was down a lot. and then that caught on fire. i'm going to go back and look at bj's again. when we looked at it, it was flying high. something is laying it low. let me give more work on this one. it may be time to eat there but not to buy. bob in california. >> caller: bob here, jimbo. >> what's up? >> caller: hello. i value your opinion very highly. >> thank you. >> caller: and i have given my four daughter all of on your books so they will be properly educated. >> thank you very much.
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>> caller: western digital. there are two reasons for question. one, their earnings, which they reported yesterday quarterly $2.12. and their piddly 25% quarterly dividend. on the other end, their new twice, which they are promoting for individual, personalized computing with the cloud. >> they're now advertising. >> caller: what do you think of it in the future? >> bob, a very inexpensive stock. avnet yesterday. drives are strong. i think the stock is inexpensive. i want to see what sea gate has to say. i feel right now we're out of data points having just gotten support. the group is a little too hot for me right now.
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a little bit down and then i pull the trigger. man, this this an exciting week. we have another one lined up. the old economy and the new. i'm focus on these three. the trade of value is here. and this one if oil comes down ahead of it. stay with cramer. coming up, protective coating? flirting with all-time highs after painting a beautiful picture for investors. can it continue to deliver green, or is it due for a shell lacking? cramer is getting color from its ceo. and later, power play. from inside the walls to flying high in the skies, eighton is the industrial name in charge of it all. can it capitalize on a rise in construction across the u.s.? cramer has the latest in his earnings exclusive. plus, shales away, american renaissance continues to heat up our economy. and colorado's region is in the sweet spot.
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as i've told you over and over, the big theme this earnings season is execution. well-run companies with terrific companies doing better. ppg. they make coatings for cars, planes, glasses, boats. you name it. dupont is spending off a portion. if you like dupont, you should love ppg. not that anyone should fall in
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love with a stock because it's a piece of paper. ppg reported a week ago and delivered spectacular results. rose 17% year over year. even better, they see europe stabilizing. that is huge. this remarkable company has made a lot of money over the years. stocks just 25% return since we talked to the ceo in april. his throat was sore at the time. let's see what chuck is up to. welcome back to mad money. >> hey, jim. it's great to be back. thank you. >> you sound good. your conference calls are always a great joy. it was an mazing quarter that you delivered. >> oh, it was. we had an excellent quarter, and we felt great about it. >> i think we don't talk enough -- we hated europe for so long we forgot europe was a great market. it could be gigantic for your
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earnings next year, wouldn't it? >> yes. we worked hard the the last few years to streamline businesses, to emphasize productivity. we still had record operating earnings in europe over the first half of this year. so we're poised with any improvement in the overall economy. we think we'll do even better in europe. >> and where do you think that improvement is coming from? a lot of countries, some doing better than others. spain just said things are getting better. italy is turning. is every country is giving you a little bit more? >> no. i would say we first saw the improvement in the uk. you know, that's been the early indicator right now on a positive. germany has been good. and i think we are seeing improvement in southern europe for the first time in several years. but the other market that's looking like it is stabilizing and maybe get some slight growth here in the fourth quarter is automotive oem.
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where actually they're projecting a modest but one and a half percent growth in auto builds for the fourth quarter. so that's a good sign. >> and the high-end auto manufacturers all use ppg, right? >> yeah. so we do very well with the german manufacturers, the bmws, the mercedes, audis. they continue to perform well even in this tough recession over in europe. >> going over the balance sheet and going over your cash, i see you have always had organic growth, sustainable dividend, acquisition and repurchase. to me it seems like really this cash flow is burgeoning. is it time for another acquisition already? i would have waited until after the exxon, 18 months, two years. it seems it has already settled down and you have a lot of cash coming again. >> we have done a very good job so far with the akzo here in
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north america. we're ready for another acquisition or acquisitions. so we're continue look. we have share buybacks as an opportunity. we're going to be ramping those up in the fourth quarter. but we're still looking and working our pipeline and hoping to complete deals over the coming quarters. >> aerospace was particularly good this quarter, too, wasn't it? >> yes. it's been a really solid performer. commercial aviation. after market in airlines has improved. military has been a little softer. but the main part of our business is commercial aviation. and that's doing very well with boeing and airbus. >> i was going on your website because you guys are always transparent. it's not just glidden paints. you have liquid nails. >> yes. >> a lot of companies have not done well on caulking and the industry has not been console delighting. can you consolidate that industry? >> i think it's an opportunity
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for us. without our coatings portfolios we have adhesives, sealants, pretreatment. we have a number of adjacent specialty chemical products. liquid nails is a great addition to our portfolio. we are actively looking. >> as you get bigger scale in paints, can you push back a little? >> well, we think we play an important role in both home center channels. they have been excellent partners looking to create values and solutions for them. and we're driving in our product lines like glidden or olympic to deliver for those customers and the partnerships are working very well for us. >> okay. one last thing, chuck. you're a straight-shooting guy. you're a big international business. when you look at what happened in washington, would you rather
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deal with some of the more socialist leading countries in europe, the communists in china, or the craziness in america? >> well, i think we've all been disappointed with what we have seen in washington especially the last few months or the last couple of years. and i would say that we have had very good receptions in the the markets like china or in our european markets where we are dealing with more certainty. i think they appreciate the things that we bring. employment, technology, innovation, helping them to develop. so i would say that we have very good relations globally. and i would say that we are concerned about the climate in washington and what i would call the deteriorating political situation here. too much uncertainty. and i think they're holding us back now. >> wow. all right. well, you always tell us straight. that's pretty darned straight. chuck bunch, chairman and ceo of
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ppg industries. congratulations on another fabulous quarter. >> thank you, jim. >> you heard what he said about europe. this is a big, big part of the business, europe. it's all up side surprises for 2014. stay with cramer. coming up, power play. from inside the walls to flying high in the skies. eaton is the industrial name that's in charge of it all. can it capitalize on a rise in construction across the u.s.? cramer has the latest in his earnings exclusive. ♪
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weren't we supposed to be hating the industrials, terrified of a rotation that were both sick cal just a few days ago? look at etn, eaton. it manufacturers electrical control, power management systems, hydraulics, truck transmissions and aerospace. i've been on this one forever. disappoint durable goods number. eaton is roaring. what's the deal? about a year ago they were buying cooper industries. $13 billion. now that deal is about to really start paying off. it could be seen as a quality report today, issued down side guidance the rest of the year. i personally don't see that.
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the quarter was actually far better than what most people expected. 7% increase. and from 5% this 3 approximate% or 4%. that's pretty robust. i don't think it's done. let's check in with the chairman and ceo of eaton to hear about the quarter and the company's prospects. welcome back to mad money. >> thanks, jim. >> when i listened to you in the summer, there were things that actually gained momentum almost if i can be honest week to week to where october seems to be the strongest period that you have had even though it's not covered by the quarter how can that be given the malaise in the country? >> you're right, jim. we think we had a solid quarter. sales up 42%, profits up 48%. all-time records in sales. we think the real message is the one you hit on. we saw 8% in our global
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hydraulics books. 6% in aerospace bookings in the quarter. more significantly than that, the early portions of october are going quite well as well. we're encouraged. we think we're starting to see some momentum build. we think this year we are likely to see a full year of no growth in our markets but are becoming more comfortable with a 3% to 4% growth rate for our businesses next year. if we can have a record year of sale in flat markets, we think the prospects are pretty exciting for next year. particularly when you add the 95 from synergy from cooper. >> you said, look, 2013 is going to be a confusing year for people. they just might not understand how we sort things. we're done that. going forward, it's not confusing the. it's pretty simple looking at eaton and cooper together. >> we're passed any transactional issues that have been confusing on a year to year
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adjusted basis. now we're building on this $115 million of synergy that we had this year. we'll have another 95 next year. we think importantly around the world we're likely to see a year in 2014 where industrial manufacturing production is indeed higher than the gdp growth. that didn't happen this year, which was really a transitional year in the economy. we are seeing gradual improvement going into next year. very significantly, i think most people agree. europe has bottomed. it's not going to be rip-roaring growth next year. a positive number, which is a big difference compared to the negative we saw this year and last year. >> now, you bought some companies in europe. europe turned tough. still great acquisitions. explain to people how it works. you have tightened the ship in europe. wouldn't be a dollar in sales now would produce a far greater gross margin than it would have been four years ago for you? >> that would be our expectation. you're right, we have taken a lot of capacity out of our european operations.
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we have worked on incident tkpwraeufb savings. i'm proud of the work our teams have done around the world. an additional 90 million of productivity savings. i think all that says is that we're a business that is really very tight in terms of our expense, resource and capital deployment. this increase kebgd get from 3% to 4% next year. we believe it could be very powerful. . explaining the cycle of construction. you said we're seeing pretty good bidding activity ahead of us. and you're talking about 13, 14, 15. do you think it can be multiyear? >> i do. we all know residential construction is an early cycle activity. that didn't happen because we were coming out of the mortgage crisis in the u.s. it was led with two years of a
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pretty powerful snap back and nonres. now we are seeing the residential materialize. light commercial build as new neighborhoods are starting to be built. morbiding, well, the large kphaourbl activity. and in the july and august data just issued by the commerce department i think surprised most people with pretty strong numbers. we think the prospect of a couple years of 5% top res is not out of the question. boy, that puts it right in our wheel house. >> you were bullish on the coal and under current, auto remains strong, right? >> yeah. lighting has been really one of the great franchises. really key technology trying to tap in there is replacement of traditional fluorescent with l.e.d. 30% of our shipments in this last quarter were l.e.d. we are leading the industry in this technological revolution.
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your question about auto, light vehicles around the world continue to be pretty strong. we think europe has bottomed in that as well. >> i'll tell you, sandy, i'm so glad. it was tough in the summer. i know you were unhappy with your forecast. i think people misunderstood the headlines today. it's obviously a much better than expected story. thank you so much for coming on mad money. >> thanks, jim. always good to talk to you. >> that was chairman and ceo of eaton. stay with cramer. >> by helping defend their financial futures. if you or someone in your family is proudly serving or has served in america's armed forces, we invite you to join our live studio audience on november 8 for mad money invest in america, salute to the troops. for tickets go to madmoney.cnbc.com.
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>> buy, buy, buy. >> sell, sell, sell. are you ready? ana in california. >> caller: hello, jim. boo-yah. mexican boo-yah. i'm from san diego. i'm a homemaker and i would like to invest in stock. and i like first majestic. as you know, mexico has a very good mining business. >> i know. i look at buying a silver mine in mineral. i look a mosaic. if you really want to own these, junior gold stock etf like herb cramer from the street and cnbc talks about. i want to be diversified. can i going to jessie in california >> caller: jim, this is jessie with a big boo-yah from the city of los angeles, california. >> see an angel. speak to me, jessie.
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>> caller: i'm at investing, buying later. what do you think? >> i didn't think there was that much there. i'm going to take a pass on that one. take a pass on sony. >> todd in connecticut. >> caller: boo-yah. >> you have the right guy. what's up? >> caller: mgm, do you think it will ever hit 40 again? >> mgm is at 20. i recommend it in the single digits. mike in arizona. mike? >> caller: boo-yah, jim! >> what's up? >> caller: iep. up 138% in the last 12 months. too late to get in? >> it's never too late to get in on icahn enterprise.
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give him a tweet and tell him i said that. >> allison in my home state of new jersey. >> caller: hey, jim. >> what have you got? >> caller: boo-yah. >> boo-yah. go ahead. >> caller: atmel health. >> no. nice people, but i don't want to own it. that, ladies and gentlemen, is the conclusion of the lightning round. >> the lightning round is sponsored by td a ameritrade. >> mad money word of the day is oligopoly. just like monopoly. instead of one company running everything, which is illegal, three or four.
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and nobody ever made a board game of. >> caller: boo-yah, jim. >> caller: ba, ba, ba, ba, ba, boo-yah for you. >> caller: jimmy, from california. i want to talk about yahoo!. >> yahoo!? i see your dog and i raise you my dog. >> caller: are you having a great day? >> couldn't be better. how about you? >> caller: beautiful here in texas. >> it was here. there was a fire drill. i went outside. did a lot of work. didn't let it bother me. you know, like fabulous. ♪ ♪ can't you smell that smell >> fish. >> this is a great picture. what about the fish? >> do like this. >> no. then people tweet that i'm like, you know -- >> you're in luck. from fresh fish to fruits and
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even 23 you're worried the price of crude might come down a little bit more, companies have found so much new crude in this country. petroleum. the make exposure in north dakota and shale in colorado. two of the bigest recent discoveries out there. it is only $8.1 billion company. 714,000 net acres. one of the largest holders of shale out there. they were very early. now they are being rewarded. on wednesday, spectacular quarter. they found ways to drill smarter and cheaper. $1.28 a share. revenues better than expected.
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rising 56.6%. the stock has nearly doubled since we spoke with the ceo a little more than two years ago, september 2011. let's talk to the chairman and ceo. welcome back to "mad money". >> always a pleasure to be on with you. >> thank you, sir. i want to try something different. i was going to approach it just from the idea where you have a lot of oil. we talked about that. you're a technology companies that happens to be drilling for oil. how are you able to make so much more money per well than everybody else i talked to? >> well, jim, we try to keep a real tight grip on drilling and completion costs. we've been able to knock our drill times down almost in half when we began drilling. we used to take 30 days to get to td. right now we are able to drill our wells and get them to total
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depth, 10,000 feet deep and 10,000 feet horizontally in between 11 and 15 days. so a great improvement on the part of our staff. >> could you just walk us ugh n do that. when people are 10,000 feet down they are thinking that's a mine shaft that took three years to get to. and then going horizontally. people can't get their minds around that. you have to walk us through that. >> big improvements in technology, brought in by technology of the drilling rigs we use, 1500 to 2,000 horsepower top drive. when we get into the horizontal portion of the well bore, drill bits today can drill that entire horizontal well bore many times with just one well bit. so we don't stop, have to come out of the hole to replace the well bit.
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that really has been the major improvement on cutting down our drilling times. >> it's remarkable. it makes me think maybe there is a lot more oil in the area where i think. i think the when you hit it's the biggest. when you miss, not so great. how big is colorado for you? >> well, i really believe that as we look ahead and plan, because we have over 3,000 drilling locations in the northeastern colorado. as we plan our drilling the next five to seven years, to bring that value forward so it has good present value, goodin increase in net asset value per share for our shareholders, there's another whiting imbedded there within our play alone. and and predominantly is a result of what you just
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mentioned, jim, which is it is so oil rich. per spacing unit has 16 million in place. we're developing it on 16 wells per spacing unit. that means we're able to drill a well out there with about a 7,500 foot lateral. so about 5,000 fetal deep, 7,500 feet laterally or horizontally for five to five and a half million. and we believe over 400,000 boes of recovery per well. that gives us a great five or six to one on our money and aside significant shareholder value to whiting. >> how is it four years ago we didn't know about bakken and it's a few miles from denver?
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>> right here in whiting's core lab in our denver headquarters we're able to analyze core. now, the niobara has been telling us there's a lot of oil in place. the old wells that we began drilling in the late '60s and early '70s, however, were vertical wells. we had to refrac them many times to improve their recovery. now we can go horizontal with this new technology and using good, clean water and clean sand, frac them in 40 stages over that 7,500 foot well bore, with about 120 different entry points across those 40 stages. really breaking up that rock with nice, clean water and nice, clean sand and bringing all that energy right back here into the united states. >> well, i've got to tell you this. you are a scientific pioneer who also happens to be an oil man.
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your presentations show the greatness of what you're accomplishing. the trade deficit you go over. energy independence. thank you so much for what you do. thank you for the tremendous success whiting has had. >> all the best to you and your viewers, jim. >> thanks james volker, chairman and ceo of whiting. we liked bakken. maybe this can go up to 40%, 50%. it wouldn't shock me. >> mad about "mad money"? immerse yourself into cramer's world. while you watch the show with zeebox. on your phone, tablet, or on the web, get sneak peeks, and join the conversation. download the free app today for the ultimate cramerican adventure.
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where does it say that we have to hold every stock to the same set of rules? where is it written that it's wrong for a stock to go higher based on just revenue growth, not earnings? is there some kind of rubric i don't know about that says certain stock needs are legitimate and others aren't? when did we stop counting
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rallies on the worth of enterprise rather than the multiple put on its earnings streak. a remarkable 24% to $17 billion. it's the way that somehow this whole move shouldn't be permitted. it's as though we shouldn't count the 24,000 percent return since they became public in 1997. or the doubling since the beginning of last year. no, it doesn't count. i have people speak of how this will all come to a horrible end. there has to be a moment where they switch to profitability or it will get crushed. but you know what, this is all nonsense. it's 1 pupb% theoretical hog wash. let me allow you in on the simple truth. the goal on the stock market, guess what it is? this is the goal. maybe this sound will help. it's about making money. there are many ways to make money, some more risky than others. however, the goal is always the same, to get rich owning stocks.
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the moment we start thinking differently is the moment you're not investing. you're just three rising. i am proudly not a theorist. so if you subscribe to the idea that it's somehow wrong this $166 billion encloses as of beautiful company shouldn't be trading where it is, i want to know who made you the judge? hey, the markets made a judgment on the worth of amazon. it allows you to share 1 million shares. boom. sell. 1 million. 363. this is no small joke. it's the real deal. if you take profits in amazon today before this quarter ended, then congratulations. i know of no bank that will shun the proceeds. what if this company doesn't turn a profit? why buy? it shows no sign of even caring about profitability. doesn't that make amazon is toxic, poisonous?
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again, i think you're splitting hairs here. we don't need to question what the buyers of the stock want. what would make them pay out? we know the answer to that. revenue growth. it say huge name in money management. revenue growth sustains the increase in the chip. figures out what the wall street fashion show wants is better than deciding what you think the ceo should be doing. consider that you could have become a millionaire many times over with a small investment if you simply understood that logic. what exactly is the argument? anticipating what the buyers would do if a company hits a benchmark. no. i'm not making that money. now, i know many people say, jim, that's just the greater fool theory. where you own it hoping someone else will take you out at a higher price. well, here's a shocker. that's why you own any stock.
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at least amazon is transparent. it is spectacular execution. so i say simply congratulations if you gamed amazon correctly or frankly you went in for the long run. you were just plain wrong. and while you can come back and say, hey, cramer, just you wait, crash and burn coming, i'll respond, people have been saying that for the last $166 billion of wealth creation here and they left huge gains on the table. >> so let me tell you something, for all the amazon haters out there, let's just stipulate you've been dead wrong. move on. monday, kick off the trading day with "squawk on the street". live from post nine at the nyse. >> oh, no. >> let's just say yes here. >> i'm sorry. >> you always take it so hard. >> i try to answer honestly.
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new economy stocks we'll be focused on later on tuesday. i like both of them ahead of the corner. one needs to raise money. i want world domination. i'm jim cramer. i'll see you monday. train wreck rolls on. tonight new promises from the white house and growing dissent from democrats. should republicans continue pushing for delays or just liet the president's signature health care law collapse. rand paul placed a hold on janet yellen bid to serve as the next chair of the federal reserve. and new problems for the budget deal. harry reid and even some republicans are now talking tax hikes. don't do it, gop, it's a big mistake.
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