coming up tomorrow, grammy-winning country music singer martina mcbride and the legendary tony bennett. >> and fast fixes for your fashion emergencies. see you tonight at "scandalous." i'm jim cramer and welcome to my world. you need to get in the game! firms are going to go out of business and he's nuts! they're nuts! they know nothing. i always like to say, there's a bull market somewhere, and i promise -- "mad money," you can't afford to miss it! hey, i'm cramer. welcome to "mad money," welcome to cramerica. a lot of people want to make friends, i'm trying to make you a little money. my job is not just to entertain you, but to coach you and teach you how this works. so call me at 1-800-743-cnbc. we are running the gauntlet now on this market. we are asking a tremendous amount from stocks, often too much, as obstacle after obstacle is thrown in front of potential rallies.

well, that we would normally perceive to be realistic and commonplace, you'd normally get stocks to go higher, but not this time because of the gauntlet. the average warred ahead and pulled back to limp into the close. dow going on to close up just 26 points. s&p gaining merely 0.3%. nasdaq advancing only 0.15%. no company's immune from this gauntlet, including companies regarded as the best in show. vf corp, sherwin-williams, even apple and amazon who reported tonight after the bell, and i'll have more on later. let's go over how a stock can get through the gauntlet to the promised land, and what can cause it to get trapped and ultimately hammered into oblivion if it doesn't. the first leg of the gauntlet is the company beholden to europe to make its numbers? you've got to ask that before every stock -- every stock you own, ask that question. pretty simply, almost every industrial has got exposure to

europe, and that goes double for the technology stocks. this, by the way, and not the fiscal cliff, not the fiscal cliff, is behind the vast majority of the hideous shortfalls we've seen in company after company, especially those in the personal computer and dumb phone food chain. but it's also snared the usual winning suspects. google got hit by avnet. they've been pretty reliable. it's not just tech. vf corp has been sliding relentlessly because they made a couple of negative utterances about europe. that's all it took. i see no negative on the horizon. don't expect these stock fortunes to change. step two of the gauntlet, does it have exposure to the election and the fiscal cliff? you want to see how vicious this part of the gauntlet is? do you know the most legitimate big cap upside surprise this week came from boeing? boeing. which jumped a buck and a half, all the way up to $74 and change, at the open yesterday, after reporting a pristine

number. and it's been down ever since. because people perceive that its defense business will be crushed by a congress that can't avoid the fiscal cliff, even as this commercial aerospace business is clearly on fire and no one doubts that. plus, romney has been making a ton of noises about how to fix the deficit while still allowing more military spending. no one cared about boeing's upside surprise. the stock can't seem to stop going down. until the election and the fiscal cliff resolve themselves, we could tread water on these issues too. and then this one is the most fascinating, because it's in flux right now. the china test! here the data depends on the day. it's day to day with china. you've got a knife where the data is strong, out of china, it's good. you get weak, it's bad. got strong, cummins goes higher. same with a stock like timkin. remember them? the ohio-based industrial we visited last week which reported a shortfall, but a lot of that shortfall came from steel that's made in china! you get china to turn around,

this part of the gauntlet can be breached. but every piece of chinese data is potential to call the whole enterprise into question. call it too, let's say, unresolved for now. however, i am leaning personally, heavily toward the idea that china has put in a bottom and 2013 will be better. that's why my charitable trust, which you can follow along at actionalertsplus.com, is heavily weighted towards industrials that do business with china, and yes, has a position in the chinese market itself. once you make it through these first parts of the gauntlet, you've got to get through perhaps the most miserable portion of all, and also least understandable, which is why we're going to spend a few seconds explaining it. it's the expectations leg of the gauntlet i've been talking about all week. let me demonstrate by using the curious case of tractor supply. the rural retailer, something that mom and pop feed and grain stores currently offer, tractor supply takes it to those guys. because it's got the critical mass and scale to be able to buy the goods cheaper than the mom and pop feed and grain outlets, and it can therefore sell the

goods for less too. these feed and grain, mom and pop outlets can buy from the tractor supply cheaper than the companies that make the stuff. last night the compa beat estimates and raised its forecast. formerly the holy grail of earnings. isn't that what we like? tractor supply dropped $2.28 or 2.4% today. it's crying. it simply didn't beat enough, it simply didn't raise enough given that the stock was already up 33% going into the quarter. tractor supply had been flat or down, that combination would have sent its stock up huge. just go ask the people at procter & gamble, which led the dow today on a beat and raise that was only a fraction of the upside surprise of what tractor supply delivered. but proctor was up a lot less going into the quarter. people expected very little. so it was much easier for them to clear the expectations hurdle and slip right through the gauntlet. you can put many stocks through this exact same prism. under armour. it beat and raised in tremendous fashion, but it fell $3.69 today, as if it had failed to do either.

that's what happens when you have a stock that's rallied 47% coming into the year. yes, 47%, under armour has been up. i don't know if it would have mattered what they said. and speaking of it doesn't matter what they said, what about sherwin-williams? it gave you a terrific beat and a fabulous raise, but it was neither terrific or fabulous enough, not to keep the buyers in, because the stock had rallied 60% since the year began. i think that sherwin-williams can rally back to where it was, but it might find itself trapped in a different portion of the gauntlet, the one that says if romney wins, he will fire bernanke, and if bernanke is fired, you'll see a raise in mortgages, which will crush the nascent housing boom which has powered sherwin-williams in the first place. what about regeneron, the biotech company that has been a longtime cramer fave? it needs to be shot into the eye once a month, it's real expensive. but the alternative is a drug that has to be shot into the eye every week. 12 expensive shots or 52 less expensive shots?

the competitive drug comes in a big, expensive vial. this year the fda has said that process could conceivably cause meningitis, no outbreaks, but it could. what could be worse than getting a shot in your eye once a week? how about the chance that the shot could give you a lethal case of meningitis. so last night regeneron reported $1.85 in earnings yesterday. the street was looking for $1.15. hear that? $1.85, we thought $1.15. we keep hearing that market participants are disappointed with the performance of revenues. not with regeneron. regeneron's revenues came in with a gold medal. but regeneron was down $7.46. why? simple. you can't get through the gauntlet unscathed if your stock is up 180% for the year while going into it. the expectations were so great that no amount of beating and

raising would have been enough there. everything has to be put through the gauntlet, every stock, including apple. apple reported disappointing numbers tonight. we didn't get the right ipad number. iphones were good, weren't blowout. and the stock's down 10% from its high going in, so you would expect that it would bounce, right? but it's up 50% for the year, so it needed to do better to stay lofty. so the gauntlet's taking the -- let's just say, upside out of apple. oh, amazon's the toughest of all. it's made a habit of reporting lower than expected numbers. tonight's no different. which should clock it, given that it's up 28% for the year. but when the stock quickly dropped 15 points, buyers rushed in, because many don't feel amazon is an investment story, which makes the gauntlet run less hazardous. as for many, amazon is a sales, not an earnings story, and sales were basically in line. they don't look at that bottom line. suffice it to say, if the stock were flat for the year, amazon would be up huge tonight. instead, it's not much, because

it's not that much of a needle mover and the buyers seem to love it no matter what. here's the bottom line. i can't recall when the gauntlet to go higher has been this difficult. for many stocks, we get lower prices and then remember, almost no company gets through the ridiculous gauntlet of the third quarter of 2012 unscathed. dorian in texas? dorian? >> caller: boo-yah, jim, how's it going? >> real good. how about you? >> caller: i'm doing just fine. say, i was looking into this recent wave of positive housing reports that have recently come recently acquired hlv, and it's been performing is very well. i've been trying to pick a new buy price and i wanted to get your outlook on the stock. i was and wondering how you felt this looming fiscal cliff could affect the housing market overall? >> it's definitely going to affect the housing market. if you think romney's going to win, you don't want to own the housing stocks.

why do i say that? because bernanke has been the best supporter of housing stocks. if you want a more speculative housing play, i would go with polty or lennar. let's go to john in massachusetts, please. john? >> caller: hey, boo-yah, jim. how you doing from halifax, massachusetts. my question is about best buy. my son has a bunch of stock, he worked for the company. is there a buyout? where's it going? >> there's no buyout. i believe the balance sheet is bad. companies that have bad balance sheets tend not to get buyouts. i think your son should be scaling out of the stock. i think that's important. i mean it. i think he should be selling the stock. let's go to ron in california. >> caller: jim, boo-yah from beautiful san clemente, california. my wife, adele, and i love you. we love the show. i want to say thank you so much for the tips on ross stores and harley davidson. i made money on both of them.

>> i like that! >> caller: and i own a packaging company too. anyways, professor, i want to know your views on wynn resorts, las vegas sands, and baidu.com. >> baidu, i'm not that interested in. i like the whole chinese market index. las vegas sands is good. i think wynn is excellent. the dividend is terrific. steve wynn had maybe one of the best conference calls after facebook. it was really magnificent, and he talked about tax policies and dividends, made me really want to own the stock. i think you're fine there. the gauntlet, it is brutal. the gauntlet is unforgiving. but it's unavoidable for stocks, until europe gets better, china gets more clear, the election is behind us, and the fiscal cliff is at last history. "mad money" will be right back. coming up, box cutter? international paper got burned today after disappointing the street. but, should you think outside

the box and buy the stock after its decline? don't miss cramer's earnings exclusive with the ceo. and later, patently false? concerns over sanofi's patent cliff seem to be passing as the drug giant reported better than expected earnings today. but can it continue to fend off competition, or could its condition take a turn for the worse? cramer's talking with its ceo. plus, chip check. lsi semiconductor beat the street last night, sending the stock skyward. but despite the move, it's still lagging the averages this year. will it continue to play catch-up? cramer sits down with its ceo. all coming up on "mad money." don't miss a second of "mad money." follow @jimcramer on twitter. have a question? tweet cramer, #madtweets. send jim an e-mail to madmoney@cnbc.com.

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companies have done everything they can to take control of their own destiny. but what happens when a company with fabulous execution, nevertheless, manages to miss those posted numbers? how about the case of international paper, ip, largest maker of container board and paper in north america.

many are hostage to the fortunes of the broader economy. but international paper, under the leadership of its terrific ceo, has been transforming itself for years, selling off its land holdings, shifting from paper towards packaging products, and then buying temple inland earlier this year in a really fantastic deal that's allowing them to cut costs left and right while taking out a ton of capacity. plus, international paper pays you this juicy yield. they raised the dividend earlier this month. the company delivered what a lot of people thought was a two-cent earnings miss, and revenues came in a tad light, rising just 5.9% for the year. in response, the stock got dinged. of course, more importantly, it had a huge run going into the quarter. this is another case where great expectations meant the stock probably had to give up some points. now that it's pulled back, though, is it worth buying? let's check in with john faraci. he has a better sense of the quarter and what comes next. mr. faraci, welcome back to "mad money." good to see you, sir. thank you so much. please have a seat.

we think this is the case. i went over this with stephanie link, my research director. we said this was the case of a stock that had gone up and up and up. it may not have matter what you reported, because there really wasn't anything that was a surprise. you had said there could be some down time, and that's what happened here. >> sure. >> so are we in a position to say the whole merger that we love so much is still very much on track? >> absolutely. we had a $300 million merger benefit target in two years and we got to that target in less than nine months. so we're going to blow right beyond the $300 million. and it's more faster. the temple inland integration is going very well. and i think this time next year, we'll be optimizing the business, not integrating it. >> okay, if that's the case, you're probably, of the large-cap ceos i deal with, you're the most pro-dividend of anyone. you've been saying that over and over again. so the board will consider over time taking the dividend even higher. if all those -- if the temple inland stuff comes through. >> in today's global economy, it certainly is challenging, the fact that the board agreed to

raise the dividend, in the fourth quarter, i think is a reflection of their confidence in our ability to generate strong, free cash flows, even in this kind of economic environment. and we're pretty positive about next year. >> steel, they haven't been able to put through any price increases. aluminum, they've had to cut price. zinc, cut price. iron ore, tremendous price cut. coal, you guys put through a $50 price increase. how is that possible? >> we haven't had a price increase in 2 1/2 years. and at the end of the day, these are all about supply and demand. and when we looked at the supply and demand from our perspective, we saw that was a needed opportunity. because prices hasn't moved. they'd been basically flat for over two years. >> okay. now, international paper, when my father did work for it, was domestic paper, frankly. they could have called it national paper. you are truly international paper. on october 10th, you told closing bell, i think china's growing far less than 7%. they slowed down and it feels more like 2% or 3%. i know that's not that long ago, but we're starting to hear

people saying, they recognize this, and there's beginning to see some green shoots in china. >> well, i was in china a month ago. >> okay. >> and our business over there is about half shipping to companies that export the products. the products leave china, and the other half, products that stay in china. and the half that goes out of china, has really gotten hammered. it's down 15% to 20%. there's still growth in the domestic market, but when you put the two together, it's starting to like it's 2% to 3% gdp growth. but i don't think that's structural, that's cyclical. china's going through an adjustment, they have a new government that's coming into place. they'll get their focus on the economy, and when the chinese do that, they typically do a good job of executing. >> well, you've also had tremendous growth in other bric countries. brazil has been a big focus for you. it's working there, right? >> we've been in brazil for 50 years. we got in the paper business first, and as you know, yesterday, we announced the acquisition, 75% acquisition of a corrugated box company in brazil, which really puts us

into the number two or number three positions in a growing market. between mexico and brazil, that's almost 60% latin american corrugated business. we've got a strong position in mexico and now we've got the footprint in brazil. >> now, when my dad was selling corrugated paper for international paper, the one thing that we knew was that only wholesalers knew what corrugated paper was. it used to be one of those things where big businesses knew. we all get packages now at home. we come home every night and there's a package from amazon that's in corrugated. everybody ships them because of the internet. how do you think that the holiday season is going to be for international paper, because of all this internet ordering? >> we were talking about that this morning, with, you know, one of the interviews, and when you slice apart our corrugated packaging business, it goes into so many end-use markets. online retailing looks like, at this point, it's going to be stronger than last year. because we see some strength in that segment of our corrugated box business as we go into the holidays. >> i know federal express and

united parcel both talking about being good holiday season. again, the transition toward -- from brick and mortar to web has really been a great thing for international paper. >> it does help us in the packaging business, for sure. >> when will you be able to make another acquisition? because the last one's been so fabulous. >> well, this international paper isn't all about m&a. >> that's a good point. >> it's about putting together a set of businesses. we really refocused and repositioned international paper. so it's all about execution and delivering on all the initiatives we had that go beyond acquisitions. a major project starting up in russia, that serves the growing russia market and the growing china market. we've got the completion of the temple integration benefits, we've got a new paper machine starting up in china, a business in india that we just bought, that's starting to get integrated and get some traction. paper volume is growing at almost double digit rates. i think we've got enough on our plate, and we'll go out and generate a lot of cash and use it to create shareholder value. >> and raw costs are pretty good. >> yeah.

>> you've got that great combination for gross margin expansion and top line being good. most companies have gross margin contraction and top line being weak. >> i think we've got a lot of opportunity for margin expansion next year, and we're well positioned, we see more of the same. we don't see a snap back in the u.s. economy or the global economies. but where we're positioned, we're in good shape to generate significantly more cash flow next year than we did this year and improve our ebitda. >> thank you, john faraci. this is how the investment process is supposed to work, guys. the company does really good things, keeps its costs down, blows out its sales, makes more money for you, and returns some of the dividend. stay with cramer. coming up, patently false. concerns over sanofi's patent cliff seem to be passing as the drug giant reported better than expected earnings today. but can it continue to fend off

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with so many people fretting about the impending fiscal cliff at the beginning of next year, and the earnings cliff that numerous companies seem to be falling off right now, it's worth remembering that when you're approaching a gaping crevasse that could devastate your business, you don't have to take the plunge. we want to own companies that can bridge these grand canyon-sized gaps, and that's why tonight i want to talk to you about another cliff entirely, the patent cliff. remember that one, that's where virtually every single big pharma company was supposed to be crushed as they lost patent protection on some of the most profitable drugs? we're right in the middle of the patent cliff. but some drug companies saw this problem coming years ago and they took action. and they bridged the crevasse, so that, well, now they're doing much better than ever. companies like sanofi, sny, the french pharmaceutical outlet with a bountiful yield of 3.8%, that i've been behind forever. sanofi realized the patent cliff would be a problem years ago, from 2008 through this year, the company was expected to lose

patent protection on drugs that represented a quarter of its sales, close to half of its profits. but they didn't just sit there and take it. they moved aggressively into vaccines, animal health, diabetes, all growth areas, unfortunately diabetes being the greatest growth area in the world. last year they bought genzyme. we talk about orphan drug plays all the time. genzyme is the key of orphan drugs. they treat rare diseases. now all these moves are paying off. they reported a terrific quarter this morning and the stock rallied nicely today. in fact, sanofi is giving you a 39% return with reinvested dividends since we spoke with its ceo in september of last year and told you this is the one to buy. and i think they're going to be more ahead. let's talk to chris veeboker. you came here and laid out a strategy of going into emerging markets, vaccines, animal health, diabetes, genzyme, and they all worked.

>> i really wanted to get off this patent treadmill. and to do that, we had to find businesses that had some barrier to entry that wasn't related to it. so whether it's capital investment, know-how, or brands, this is going to give us much more sustainable revenue for the long-term. and i think that's where the multiple expansions come from. >> so emerging markets, it's not just bric anymore. with you, i read about the 100 million people in vietnam. nigeria you're into, colombia. this sounds like the new level of emerging markets, not the old ones. >> if you look at a whole series, if you take the continent of africa, for example, china is actually investing significantly in africa. but also in education and health care. if you're in southeast asia, you know, the costs are rising in china, and so some of that economic growth in china is benefitting the region. colombia is a phenomenally growing market in latin america, which has really been driven by brazil.

we like to be there, because our competitors aren't there. and so when we do acquisitions, i prefer to be where the others aren't, because i'm not in an auction mode, and we feel we can drive more value in those places. >> animal health is chronically underrated. people don't realize how much money is spent. you -- other companies have been divesting animal health divisions. you're becoming the foremost animal health division in the world. >> and there's two pieces to animal health. there's a piece which is pets. and that acts more like a consumer business. >> right. >> front line is our single business. >> everybody knows frontline. >> absolutely. and that is like a consumer business. >> right. >> nice, long assets. but the other part is the production animals. 7 billion people on the planet and they need to be fed, and animal health products improve productivity. so as middle income groups grow, they want to eat more protein, need more animals, and you need animals that are better cared for. so what we have also found is that in economic downturns, this is not where households make

trade-offs, actually. they will continue to support fido. >> we saw that with petsmart. and we go to costco to get our stuff. got great prices for your stuff there. now, we have been behind orphan drugs as a theme for this show, because the fda has become too difficult to navigate, costs too much, and you bet the ranch and sometimes it doesn't work. you, too, are obviously behind the orphan drug move. >> yeah, i think there's a couple of reasons. i mean, first, you have very clear unmet need. but very often, you understand the genetic target much better than in most diseases. and this is really where translational research comes in. so you are going to make a big difference to people's lives, and you're going to have a higher likelihood in the development of a product, because of what you understand about the disease. there are 7,000 rare diseases today. we only know how to treat 300 of them. so there's still a huge amount of work to be done, a huge opportunity here. >> earlier this week, we had isis pharmaceutical. you're partnered with them.

and some people are worried about their safety issues. the ceo was on and said, listen, the safety issues are overblown. i know that's very granular for you, but do you have a view on how isis is doing with you? >> isis is a very good partner for us. and any safety issue depends on what you're treating. if you're treating a common cold, you're not going to tolerate very many safety issues. the disease this is meant to be treated, people will die at age 40 if they're not treated. the only treatment today is they will hook you up to a machine and suck the cholesterol out of you. it does need to be properly monitored. we have a risk management program. >> so election coming up in the united states. obviously, you're a french company, but you're a worldwide company. would either candidate -- judging from the debates, would either candidate be better for your business? >> well, you know, i think we've been through -- we went through the bush administration, the obama administration.

you know, i think there's going to have to be some examination of health care costs, no question about it, no matter who gets elected, there is a belief this is one of the major drivers of government deficits going forward, so we'll have to work with either administration, but it's an important issue on both sides of the atlantic. >> the last question i want to ask you, if there is one area that's costing governments worldwide the most, it is diabetes. that has become a major focus for you. where are we? dreaded disease, epidemic proportions. what have you got? >> 350 million people have type ii diabetes on the planet. and the most important thing, though, is that we can prevent this disease. and we will spend $100,000 to treat you. we will not necessarily spend $1 to keep you well. there has to be a shift in health care priorities to more prevention and better management of these chronic diseases. and i actually am working with

the ceo of nestle on a global health charter. >> oh, great. >> to actually try to mobilize multiple stakeholders around this. >> i wish you great success with that. and your shareholders have had fabulous success, just as you outlined it on the show. best performing drug stock we're following. >> you believed in us first. >> i sure did. i thought you were terrific. and you're going to pay us to wait with a great dividend. and no one believed, and they were wrong. they were wrong and you were right. >> i want to thank chris viehbacher, ceo of sanofi. look at that yield. it is clearly not done going higher. stay with cramer. coming up, are you ready to get charged up? cramer cranks up the voltage and goes electric on an all-new hyperactive "lightning round." later, chip check. lsi semiconductor beat the street last night, sending the stock skyward, but despite the move, it's still lagging the averages this year. will it continue to play catch-up?

cramer sits down with its ceo. all coming up on "mad money."

before we get to the "lightning round," i want to tell you about our annual veterans day show, invest in america, salute to the troops. we're welcoming folks in the studio for friday before veterans day, that's november 9th. so if you're a citizen of cramerica and have a connection to our armed forces, head to our

website, madmoney.cnbc.com for free tickets to this show. you know how we feel about the military on this show. i have the utmost respect for the men and women who have served, like my father, or who are currently serving, and we need to honor them on "mad money." i cannot wait for this special show. and now it is time, it is time for the "lightning round" on cramer's "mad money." rapid-fire calls, where you say them, i tell you whether to buy, buy, buy, or sell, sell, sell. when you hear this sound, then the "lightning round" is over! are you ready, skee-daddy! it is time for the "lightning round" on cramer's "mad money." i'm starting with ben in maryland. ben! >> caller: hey, man. >> yo, yo. >> caller: how you doing? i want to know about the stock, nike. >> i like nike, i made a nice trade for actionalertsplus.com, but if under armour isn't doing well, people decide they don't like nike, if nike goes to $85, that's where i would pull the trigger, $85!

i want to go to patsy in massachusetts. patsy! >> caller: baa b-b-b- boo-yah! >> what's up? this is just a stock that's completely on hold, waiting for better news. don't buy. let it come under 19. i want to go to phil in louisiana. phil? >> caller: yes, jim? >> yo-yo? >> caller: i have a stock for income and diversity, and i want to know whether to buy more, sell, or hold bpt. >> no, no, we're not in these now. i'll tell you why we're not in these, because they keep cutting the distributions. i do not want you there. i would rather you have something consistent. look, the one that we've been recommending and i think is so good is lnco, linco limited liability. let's go to david in florida. david? >> caller: hey, jimmy! >> yo yo? >> caller: how you doing, young fella? >> thank you. >> caller: i was wanting to know

about a little stock called windstream, symbol win. >> that's a tough one, win, because it's got a good yield, but i thought when the company came on, it was a lukewarm story. i think if you want yield in telco, go to century link, or my favorite, which is verizon, vz. let's go to larry in new york. larry! >> caller: hi, jim, how are you? >> good. how are you? >> caller: okay. my question is concerning forest labs. i wanted to know, i've had the stock many years and it's done well in the past. do you think over the next year, it's worth holding? >> yeah, i think it's okay. i like the dispute among the owners there, this cfo is from summit. very, very good. let's go to gino in florida. gene? gene? >> caller: yes. boo-yah from ft. myers, florida. >> oh, fantastic! give it to me, give it to me. >> caller: my question tonight is on royal caribbean.

i know they had a great day, but do you see them going higher? >> yeah, i'll tell you the truth. how bad can things be if carnival cruise and royal caribbean keep going higher? buy, probably go down a buck, and then you can pull the trigger! and that, ladies and gentlemen, is the conclusion of the "lightning round"! >> the "lightning round" is sponsored by td ameritrade. i want to give you a black knight combat boo-yah to ya! >> a military boo-yah! >> a big navy boo-yah! >> a high-flying united states air force blue, blue, blue boo-yah! >> we've got to have them on the show. boo-yah back at you. >> this veterans day, "mad money" salutes those who defend our country's freedoms, by helping to defend their financial futures. if you or someone in your family

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as i've been telling you over and over, the story this earnings season is about expectations. we've witnessed time and again, when a company has great expectations going into earnings and only reports a so-so quarter, even a lousy one, the stock gets crushed. sometimes it's even a good one. that's been the dominant theme this week. but there's another side of the story, because when the expectations are lousy going into the quarter, even when a company report results that look

on the surface that are not so hot, the stock can rocket higher. that's what happened today with lsi corporation. it's a semiconductor company that makes chips for storage and networking technologies. i remember when it was lisi, i used to trade it all the time in my dorm room. this is a good one. lsi is a big data play. that's been one of my favorite themes in tech. but this has been a terrible period to own tech stocks. last night lsi reported at first glance what looked to be like a not very good quarter, and first glance being the operative term. company delivered in-line earnings, missed on revenues, issued down line guidance. but in fact lsi roared higher, rallying 7.3%, one of the biggest gainers in the market. why? expectation. in the last six weeks going into the quarter, lsi was down nearly 20%. that kind of action suggests that some people thought the quarter would be horrific. but when their low expectations were exceeded, the stock went higher. and a transition's happening that's really important. does lsi mark a turn in tech or are their expectations too negative? let's talk to abby toll walker, the president and ceo lsi corps

to find out more about the quarter and what's ahead. welcome back to "mad money." have a seat. >> good to be back. >> this was a really important quarter, i felt for you, and i'm referring to your investor relations presentation and conference call. you're going from what a lot of people don't like to what a lot of people do like, which is cloud and infrastructure. how far along are you and do you think the stock was up because you're further along than people think? >> a lot of our investors said, your guidance is a lot better. >> very important. >> relative to our transformation and increasing our position in cloud and data center, we're at the early stages here. probably 20%-25% of our businesses is associated with pc-centric, client-centric, but the rest of it is cloud, infrastructure driven by all these storage requirements, as well as all this growth in traffic, mobile traffic as well. >> okay, now, what you want to do is you claim in the presentation, something that i need our viewers to understand, because they go crazy with the $6 stock. i want them to understand what

they're dealing with. you want to own the base station. what is the base station, where does it appear in the food chain? >> base station, think of it as access. when you get on your mobile handset and you make a call, it has to access something to go on to the network. that's the base station. so we want to own that in terms of the critical silicon there, because as we continue to drive a tremendous amount of growth, mobile network is going to continue to grow and we want to benefit from that. >> the market's in a schism here. there's personal computers and i think we all know, you're a company that's different. that's kind of a no-growth business. this mobile business. some people are getting worried. they're thinking that perhaps the telco companies aren't spending enough. perhaps the enterprise is not spending enough. it looks like from your point of view, that even if they were cutting back, there's still a lot of spending going on. >> there is spending going on. we're benefiting from some high-growth markets, flash in particular. and flash is helping certainly data centers and large web companies respond to the tremendous growth that they're dealing with. and lower overall total cost of

ownership. but, you know, jim, tech, tech is constrained today. tech is tied so tightly to gdp's growth rates around the world, it's discretionary, people hold back, right? so there is a constrained environment, once gdp growth rates sort of improve, economic outlook improves, i think tech is in for a pretty strong cycle. there's a lot of great technology out there. >> i don't want to be too optimistic, but there is also, at the same time, still, even with the world selling a data deluge, that your company is uniquely prepared for. >> that's right. we're generating a tremendous amount of data, whether it's a bad economic environment or a good one. and that data has to flow through wireless infrastructure, flow through networks, and ultimately there's tremendous growth in big data centers, web, cloud-oriented services, as well, which we service through our storage and networking products. >> in your reports, you make it very clear that you've got proprietary technology that's better than others. a lot of people might say, well, wait a second, why can't an intel come in and smash them, texas instruments? what is it about lsi that makes it so that you own your space?

>> well, we've been in this industry relative to storage and networking for 20, 30 years. we've got very core ip that help us accelerate, you know, storage or data and data movement, as well as network traffic, very uniquely with some unique intelligence that we have. >> now, you have spent enough money to buy back 100 million of your shares. and yet you still have no debt and you still have cash. is there progress with this buyback? can you say it's been a win, versus, say, giving a dividend? because when i look at the stock, the stock's not moved, but the buyback's been immense. >> yeah, there is a benefit. i mean, the buyback has been accretive. >> it has been accretive. >> and we do generate a lot of cash. we have excess cash. and right now, using that cash for stock repurchase is better than introducing a dividend. dividend for us is probably a question of when and not if. right now, the stock, we think, is undervalued and we've got cash and we've got an

authorization of $500 million. and we'll certainly be active as we have in the past. >> one last question. if we see you next year at this time, and i sure hope we do, will we be not having to worry or even talking about personal computers? >> from an lsi standpoint, we've got so many other growth drivers. a lot of the growth drivers are in networking and data center and flash, a market that's growing 40%, 50% per year and we're outgrowing that market. >> then i think you've answered that question the way i like it. that is the president and ceo of lsi corp. ones with great buyback and great prospects, they're up to the task. i would stay with lsi if you bought it watching and i would think about initiating position if you're thinking that tech has finally bottomed. thank you. >> thank you. coming up, the bank job. they don't get much bigger or controversial than bank of america, and the plot just thickened after the feds hit them with a $1 billion lawsuit. is it time to make a withdrawal? don't miss cramer's take.

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our allies just glazed over another lawsuit against bank of america. this time from the justice department, because of alleged mortgage fraud against fannie mae and freddie mac. why do we just yawn and move on these days? first of all, no one will be pursued. the buck did not stop in the institution, it stopped at the people running the institution at the time. but the only bills these guys will have to pay are the ones on

their boat drink tab. second, the shareholders of bank of america are the ones who will ultimately have to pay the legal bill and the settlement sum. they're going to recruit some money for the stooges who bought these crumby money from bank of america, from the stooges who are stupid enough to be a shareholder. no big institution posts the disastrous shut downer of arthur anderson ever, since enron, ever gets shut down, as that costs too many jobs. and bank of america is on the too big to fail list anyway. third, the housing market is coming back and the only thing stopping it from booming is the fact that the banks are so far behind on their legal paperwork and don't want to add new officers or personnel until all these legal bills are sorted. they're scared and this lawsuit makes them more scared and less willing to lend money. and the decision to sue bank of america now for what its predecessor did seems almost like desperation, especially since fannie and freddie were hardly innocent in the drama. this suit won't change anybody's behavior. that changed years ago. finally, we never created a

federal criminal mortgage task force to target those who got us into this mess, even when you go back and look at the headlines, you can see those. we always heard these cases are too hard to make in court, so why do we ever bottom to sue the companies when the people who will actually pay the damages are the hapless shareholders who did nothing wrong whatsoever. i say all this as a guy who's very pro-prosecution in real life. i thought a group of people who so aggressively went against the law that fraud cases could have been brought and the wins would have been in the bag. but the only really major case i saw about mortgage fraud was a loss for the government. a complicated case involving valuing securities owned by a fund and the managers who valued them. that loss took the steam out of the government and the justice department in washington. rather than assessing what went wrong in brooklyn, decided to focus on other less important issues, or cases that wouldn't be as difficult to bring or to win. so bank of america for a huge amount that will go who knows

where and lots of money made by the defense lawyers and will cost bank of america about half a penny a share and the shareholders will pay the bill. that's about it. the failure of the government at all levels to regulate and prosecute bankers now rivals the failure of the government and the banks to do their jobs and trying to clean up the mess. this lawsuit is still one more step backwards. too little, too late, with not an ounce of real justice coming from the justice department, what a missed opportunity. just another barn door closing on the shareholders' faces after the supposed bad guys got away. stick with cramer. at cepacol we've heard people are going to extremes to relieve their sore throats. oh, okay, you don't need to do that. but i don't want any more of the usual lozenges and i want new cooling relief!

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>> okay, listen, i have been saying from the beginning, apple is an investment. that's how i hand over the charitable trust. it's not a trade. don't have any a,