Jim Cramer usually shouts his praises for Orange County stocks.
Irvine-based Broadcom Corp., Santa Ana-based Powerwave Technologies Inc. and Costa Mesa-based Ceradyne Inc. come to mind.
But Cramer, host of “Mad Money” on CNBC, seems to reserve the most adulation for the Newport Beach maker of chips for set-top boxes and modems,Conexant Systems Inc.
It was a good stock for Cramer and his followers,until recently.
That’s right. Cramer’s cooing over Conexant has ceased.
That means something for Conexant stock watchers. Cramer’s love of Conexant gets some of the credit for the stock’s run-up in the past year.
But for Cramer, the market has become too negative. And Conexant is the wrong kind of stock to hold in this kind of market, according to Cramer.
“During the ramp, speculation works,” he wrote in a column for TheStreet.com. “During the sell-off, speculation is deadly. When you buy speculative stocks you have to understand that in up markets, you should outperform,and in down markets, you are just going to get clobbered beyond belief.”
Cramer pointed to six specific stocks he wouldn’t like during a downturn, and Conexant was one of them.
Conexant’s stock has performed poorly of late.
From late April to late May, Conexant’s stock fell nearly 20%. Nasdaq was off 5% during the same time period, giving up its gains for 2006.
Conexant’s stock hit a high of nearly $4 in late April, but lost about $1 per share by late May. The move left it with a market value of about $1.4 billion.
Still, that’s way up from the 52-week low of $1.37.
Cramer still was talking up Conexant in late April. But the stock began to fall after the company reported a solid quarter that apparently wasn’t good enough to keep some investors on board.
The stock got some help with word of a $70 million settlement with Texas Instruments Inc. on May 5. But not enough.
We’ll see what investors do. I’m sure Cramer will have something to say along the way.
Dell’s Dip Into Retail
Wait, haven’t we seen this before?
Dell Inc. is trying to spark more sales with a couple of stores, one in Dallas and another in New York.
We all know about Apple Computer Inc.’s retail stores. They’ve been a solid play for the hip company and that glass box in New York looks pretty cool. But iPods have been the big story for Apple, not PCs.
Orange County’s own Gateway Inc. is known for its big push into retail. And it was all about the PC.
But Gateway didn’t get much return on that investment. The stores proved to be just too expensive to run. They also didn’t jibe with Wayne Inouye, the former chief executive, who had a background in retail via a stint at Best Buy Co. He made sure all of them were shut down.
In a recent question and answer piece in BusinessWeek, Jim Skelding, Dell’s director of sales for homes and small businesses, said the stores will be different in at least one way from Gateway’s.
“There’ll be no inventory,” Skelding said. “It’s the same sales model as the kiosks. We’re build-to-order and ship to you in seven to 10 days.”
Another difference: just two stores for now. They are tests. There are no plans for other stores. Gateway had 188.
Gateway’s one thriving business these days still is in retail,but through big retailers such as Best Buy. Its direct and business sales,Dell’s forte,has struggled with big declines in yearly sales.
Blum Steps Back
Scott Blum pulled a mild surprise in late May when he stepped down as chief executive of Buy.com Inc.
Blum remains chairman of the company he founded. The online retailer named Neel Grover, chief operating officer and president, as chief executive as of May.
Of course, Blum is closely tied to his company and has become its face,literally,to consumers.
In a recent TV commercial, the spot starts out with a close-up of Blum. Before the commercial ends, the camera later pulls out to a wide shot, showing Blum standing on top of the company’s three-story Aliso Viejo offices.
No word on if he’ll continue to be in any upcoming commercials.
Blum said the moves for himself and Grover reflect the reality of the way the company now is led.
Whatever the case, the company still has a huge task. It faces oversized competition from Amazon.com Inc.
Buy.com has had years of losses. But that picture improved somewhat in the recently ended quarter. The company recorded a $2.6 million loss in the first quarter, down from $4.1 million a year earlier. Its sales were up 34% to $100 million in the period.
As chairman, I’m sure Blum will continue to push Buy.com toward profits. That could help him reach his goal of taking Buy.com public and staying that way.
Blum took Buy.com public in 2000 and then went private in 2001 amid the dot-com crash. Last year, Buy.com was a step away from going public again but couldn’t drum up enough investor interest to price its offering.
The company sells everything from wireless routers to DVDs online.
