DivX makes video compression software that it licenses to DVD player companies that stream and download. Cramer noted the Google Inc. (NASDAQ:GOOG) relationship, as well as the company having great opportunities in Eastern Europe and in India because other video formats are too expensive to license.
As far as whether you should sell or hang on from here, Cramer said there are 4 buys and 1 hold from the Street. This stock is a lower-tier that might not get covered everywhere, and the IPO-lock-up doesn't come until March. Cramer thinks that may keep a lid on it until then and it could sell shares.
It is hard to gauge the real size of its market because it is a niche within a huge market and it competes with RealNetworks Inc. (NASDAQ:RNWK) and Microsoft Corp. (NASDAQ:MSFT). It trades at 17-times sales, so everything that was known back then is still known now, and he wouldn't keep hanging around in the stock. Cramer says to take profits here, and he would like it a lot cheaper than it is now.
DIVX closed up 2% at $27.69, and while it ticked up after Cramer was saying good things, it was down in after-hours after he said to avoid it.
Closing Bell: Dubai sends jitters throughout the market (S, BBY)
Heinz looking good after the second quarter?
Why isn't Bank of America updating its shareholders on CEO situation?
