Cramer on BloggingStocks: Don't fret over the top line

Posted Jul 24th 2009 9:40AM by Jim Cramer
Filed under: Earnings Reports, Microsoft (MSFT), Apple Inc (AAPL), Amazon.com (AMZN), Market Matters, Caterpillar (CAT), American Express (AXP), Bank of America (BAC), Chevron Corp (CVX), Deere and Co (DE), Union Pacific Corporation (UNP), Cramer on BloggingStocks

From TheStreet.com Network

TheStreet.com's Jim Cramer says even without top-line growth, next quarter should amaze as we see the full benefits of big layoffs.

People are way too worried that we won't see top-line growth. The great earnings numbers that we have seen are being dismissed repeatedly because -- with the exception of Apple (NASDAQ: AAPL) (Cramer's Take) -- they aren't being driven by sales, just margins. I say if you are waiting for top line, forget it. Not in this rally. Not going to happen. Doesn't mean a thing.

Here's the deal. Companies have fired and fired and fired people again and again and we have only seen a few months -- the last two of this quarter -- of impact in the cuts while we have seen myriad charges. Next quarter, even if there is no top-line growth, should be amazing as we see the full benefits of the firings. We could be looking at gigantic earnings per share without any growth because no one is hiring. In fact, they are still laying off.

Do you think Caterpillar's (NYSE: CAT) (Cramer's Take) about to start hiring? Deere (NYSE: DE) (Cramer's Take)? Bank of America (NYSE: BAC) (Cramer's Take)? Union Pacific (NYSE: UNP) (Cramer's Take)? Chevron (NYSE: CVX) (Cramer's Take)? Don't kid yourself. Companies are going to continue to fire and continue to benefit from the stabilization.

So, forget the top-line fret. Don't use it as an excuse not to buy. Wait until a down moment, like the one everyone thought would come from Amazon.com (NASDAQ: AMZN) (Cramer's Take) and Microsoft (NASDAQ: MSFT) (Cramer's Take) and American Express (NYSE: AXP) (Cramer's Take), and then go in and buy the companies that have fired the most people and are saying that things have stabilized.

They are going to report another great quarter next time. Much better than these because they will get the full benefits without the full charges and the gross margins will be huge even if sales stay the same.

Jim Cramer is co-founder and chairman of TheStreet.com. He contributes daily market commentary for TheStreet.com's sites and serves as an adviser to the company's CEO. At the time of publication, Cramer was long Bank of America and Chevron.

Tags: aapl, amzn, axp, bac, cat, cvx, de, featured, jim cramer, JimCramer, msft, unp

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Reader Comments (Page 1 of 1)

7-24-2009 @ 11:29AM

Iridium said...

Wow what a beautiful concept Jim. Don't worry about earnings. We don't need top line growth since we can just fire our way to profitability.

What a joke. This is what the publicly traded corporation has become. A corporation to put out earnings reports and satisfy wealthy investors, not to provide jobs for anyone.

We have the shells of steel factories sitting empty all around the country. A few miles from them are huge shiny warehouses that stock chinese made steel. These warehouses employ about 20 people and make the owners of the company a whole lot of money. It doesn't matter that thousands of people were put out of work at the American steel plant. The owners of the chinese steel warehouse make millions.

Hey Jim, maybe Caterpillar should fire every American worker and build everything in Mexico. Man I bet they could show some killer earnings if they did that. IN fact how about we fire every worker in America. If a company doesn't have any employees just imagine the profit margins.

You just proved what side you are on Jim and it isn't the right side. Can you explain how we are supposed to have a vibrant and growing economy if the only way for a company to reach earning expectations is to cut costs by firing workers?

Oh yeah I forgot. All of the growth is actually coming from Asia. We don't need the sales from the United States. The automakers wouldn't have declared bankruptcy if it wasn't for America. Intel showed huge growth in Asia. Same with the heavy machinery corporations. If we cut out American sales and losses the earnings would have been spectacular. A Dow Jones traded on overseas earnings, free of the drag of the United States could be trading at 30,000.

I think you let the cat out of the bag. The true motive of you and your friends sitting in the trading offices. To destroy America for the opportunity to profit on growth outside this country. You know that America can no longer grow and is in decline. Not the best way to game a system. China is a bright shining beacon to pave the way to trillions pushed the the offices of Goldman Sachs. Imagine the bonuses if they can get half a billion people in on the scam they pulled on this country.