Cramer hurt by Yahoo!, says firing Semel would be worth $1.50

On late notes in his MAD MONEY show, Jim Cramer said that Yahoo! Inc. (NASDAQ:YHOO) is the proverbial "Falling Knife," and it is hurting trying to catch it.

He says you have to evaluate how to value it, and first is earnings. He said YHOO's earnings are a travesty. He said $0.47 and $0.65 EPS are the consensus for this year and next. Cramer said the earnings estimates are TOO HIGH and he thinks they'll cut guidance for next year. He thinks it will do less than $0.50 for next year and that could mean it is a $12 stock instead of a $24 stock based on that metric.

Then he said to visit the chart; on support it should count down to $20.00 according to his technician.

Cramer said Yahoo! could participate in the Q4 tech rally if they give atrocious expectations. The company, he said, needs to trim its earnings estimates by 25%.

He thinks Semel may be a management issue now and he hasn't given any clue of leaving, but he'd be worth $1.50 to $2.00 if he got fired.

He must have been reading Melly Alazraki's post before the show. He agrees that the most intriguing thing with the company is to look at YHOO as a potential takeover candidate from four potential suitors: Microsoft Corporation (NYSE:MSFT), or even Viacom, Inc. (NYSE:VIA), Comcast Corporation (NASDAQ:CMCSA), or AT&T Inc. (NYSE: T).

Has it bottomed out? Cramer says it could go to $21 if they throw everything but the kitchen sink out and THEN it could rally.

YHOO closed down almost 1% at $24.18 on the day, and it fell to $23.82 in after-hours after Cramer panned it.