Cramer rips AT&T over WarnerMedia deal and the deliberate dividend minimize

CNBCs Jim Cramer on Tuesday heightened criticism of the past and present AT & T. Leading company for dealing with WarnerMedia, the movie and television content and streaming unit that the telecommunications giant is now looking to break off and combine with discovery.

In particular, Cramer questioned AT & T’s plans to cut its dividend after the merger is complete, which essentially reverses the telecommunications giant’s $ 85 billion acquisition of Time Warner in 2018.

AT&T shareholders have a right to excitement, Cramer said, as the stock fell more than 6% on Tuesday, extending its 2.7% drop from Monday’s meeting.

“The way they did it was completely sub-optimal and the people who sell it are the long-term owners who feel very cheated,” said Cramer, while speaking to AT&T board member Geoffrey Yang, that appeared on, blew up “Squawk Box” early Tuesday, defending planned dividend cut.

“I’m not a dealer,” said Yang. “Just looking at what is in the best interests of long-term shareholders for both Discovery and AT&T, I think this deal makes a lot of strategic and financial sense. It was clearly a tough bond yesterday, but as I said, I’m not a trader and I’m only looking at one kind of long term. “

“I think resizing the dividend makes a lot of sense and still leaves it in the top 95th percentile of any dividend company. It gives us more flexibility in allocating capital to grow the business in its core strengths of broadband, business and wireless,” added Yang added.

Cramer was sparked by Yang’s “not a dealer” comment. “This is owned by grandmothers. What an insult to their shareholders,” said the “Bad money” said. “It’s just an insult. I’m sure they’ll say, ‘Oh Cramer, what a joke.’ But I mean, they’re the joke. “He added,” I know you have to say something, it’s Corporate America. I expected better. “

“What a ill-advised strategy to come into our network and say that after not all that long ago having a CEO, we stand by the dividend,” said Cramer, referring to comments from John Stankey, CEO of AT&T, late last month and back in March.

When Stankey was asked about AT&T dividend priority on April 22nd said CNBC: “My first priority is to raise the share price so the dividend yield isn’t 6.9%. That’s what I want to fix the problem. That’s what this management team is focusing on. And if we continue to work consistently in fashion, that is what we are now, this problem takes care of math by itself. “In addition to these comments, Stankey also defended AT & T’s dividend strategy in a CNBC interview on March 12.

In fact, Cramer said AT&T should use a more forgiving tone throughout the WarnerMedia ordeal. On Monday evening, he called AT & T’s purchase of Time Warner – which lasted a drawn out battle with the Ministry of Justice under the then President Donald Trump“One of the stupidest mergers in recent history.” AT&T shares have fallen more than 20% over the past five years.

“I mean, why not just say, ‘We screwed it up.’ Why not just say, “We paid too much.” Why not just say, “We said the dividend was safe and we were wrong,” said Cramer on Tuesday morning.

AT&T could also say, “We have to do it for the company to be competitive and the way to do that is to outsource something that doesn’t really fit, even though we said it fits and … the Randall logic wasn’t logic. ” ever, “added Cramer, referring to former CEO Randall Stephenson, who was responsible for AT&T in 2016, as the The Time Warner deal was first announced.

Neither AT&T nor Yang were immediately available to respond to CNBC’s request for comments on Cramer’s remarks.

In an interview on Monday on CNBC, Stankey defended AT & T’s dividend approach.

“It is not unexpected that we have subsequently adjusted the dividend as we shift as much cash flow as we did with the media company transaction and the DirecTV transaction.” Stankey said.

“But more importantly, if we can use that cash flow to do something that we know we can get really attractive returns, well above the 5% return that the dividend yield may represent, this is it.” the shareholders, “he said.

Cramer’s Mad Cash Recap: AT&T, Time Warner and Discovery

The media may be promoting AT & T’s ((T.) – Get the report Decision to Merging Time Warner with Discovery Communications ((CHOOSE) – Get the report as a “transformation business,” but Jim Cramer told Mad Money viewers on Monday that AT&T should never have bought Time Warner. In fact, he described the original $ 85 billion deal as one of the stupidest deals in history.

What does a telephone company have in common with the media business? Apparently not much, given the final sale price, which puts AT&T on a ton of debt and cuts the dividend by more than half.

Cramer said there was never any synergy with the AT&T-Time Warner merger, and the only one who found out was Time Warner. “The whole thing was a clown show.”

However, there are some lessons to be learned. First, anything is possible in American companies and you will never hear an apology for losing a ton of money. Second, never reach for stocks with high dividend yields. As we saw today, big returns are being cut. Finally, there are no arbitrators in investing. AT & T’s board of directors could have stopped this unfortunate takeover, but not.

Investors looking for deals that make sense should consider ((CRM) – Get the report Buy Slack ((JOB) – Get the report;; Nvidia ((NVDA) – Get the report Acquisition of ARM Holdings ((ARMH) ;; or advanced micro devices ((AMD) – Get the report Purchase of Xylinx ((XLNX) – Get the report. Salesforce needs Slack to compete with Microsoft ((MSFT) – Get the report. Nvidia needs ARM to break into wearable devices. And AMD desperately needs Xylinx to diversify its portfolio.

Cramer and the AAP team look at everything from revenue and politics to the Federal Reserve. Find out what they have to say to their investment club members and have fun with a free trial subscription to Action Alerts Plus.

Executive decision: Generac

In his first “Executive Decision” segment, Cramer spoke to Aaron Jagdfeld, Chairman and CEO of Generac ((GNRC) – Get the report, the generator maker whose shares have risen 180% over the past year.

Jagdfeld said that everyone takes power for granted until they no longer have it, especially at home. But power outages are increasing, both in frequency and duration, he said, which was caused by three things.

First, we are decarbonising our power grid, which increases volatility. Second, we’re electrifying everything from heating to vehicles that increases demand. And third, climate change is making severe weather events more common, be it summer heat waves or brutal winter storms like the ones we’ve seen in Texas.

The answer to our aging and evolving power grid is to create microgrids that can include solar power, batteries for short-term outages, and generators for longer-term outages.

Generac is also the leading provider of backup power solutions for the telecommunications industries that are spending a lot of money on 5G wireless capacity.

On Real moneyCramer provides an overview of the companies and CEOs he knows best. Get more of his insights with a free trial subscription to Real Money.

Cloud software stocks

Cloud software stocks have pulled back sharply from their highs, averaging 19%, but that doesn’t mean they’re worth buying. Cramer dived into these software-as-a-service inventory to assess the damage and determine if further pain will occur.

The losses in this group were staggering, Cramer noted. Of the 75 names he looked at, the average declines were 37%, with 26 causing losses greater than 40% and 15 of them showing greater than 50% declines. Despite these losses, fundamentals remain strong. So he said the “rule of 40” still applies to the valuation of cloud stocks.

The rule of 40 says that a company’s revenue growth plus its EBITDA margin must be greater than 40. This gives a company two ways to win. You can have a lot of low margin growth or high margin with less growth. When a cloud stock shows neither growth nor margins, investors need to be clear about control.

Stocks like Coinbase Global ((COIN) – Get the report, Square ((SQ) – Get the report and Etsy ((ETSY) – Get the report All pass the rule of 40, but Cramer warned that Coinbase is bitcoin-tied and Etsy’s quarter was seen as problematic. Other stocks like Roblox ((RBLX) – Get the report, Airbnb ((ABNB) – Get the reportand Roku ((YEAR) – Get the reportAll trading in sales more than 10 times when estimates for 2022 are used.

That still makes these names too expensive if you don’t think long term. He suggested buying these names only if they continue to decline, noting that they could still have a long way to go before they bottom out.

Executive decision: Hydrofarm

For his second “Executive Decision” segment, Cramer also spoke to Bill Toler, Chairman and CEO of Hydrofarm HYFM, the hydroponics supplier whose shares have increased 9% so far this year.

Toler said Hyrdofarm is a 44 year old company that sells everything farmers need to grow all types of crops indoors. They have supplies, equipment, lighting, soil, and fertilizer that are primarily sold through retail channels. Your products improve yields and reduce costs.

When asked about cannabis, Toler estimated that around 75% of their sales came from this single industry. He said the cannabis industry all moves indoors, where it can control quality, consistency, and safety, while getting up to four harvests a year.

Interest rate hikes are not the answer

In its no-huddle offense segment, Cramer offered an alternative to raising interest rates to contain inflation. His solution? Let inflation take its course.

Raising interest rates comes with trade-offs, including a slowing economy and rising unemployment. However, letting inflation run is the better option as most of the inflation is due to temporary bottlenecks.

Inflation in minerals like copper should correct itself if, for example, China’s economy cools and lumber prices could be lowered by adjusting tariffs on Canada. Plastic plants will soon be back on stream to curb inflation, while oil producers will soon add capacity to curb oil inflation. Even the real estate market is likely to cool as more people return to the office.

With so many temporary shortages going on, there just doesn’t make sense to raise interest rates, Cramer concluded, which is why Fed chairman Jay Powell is unlikely to do so.

Lightning round

Here’s what Jim Cramer said about some of the stocks callers offered during Monday night’s Mad Money Lightning Round:

anthem ((ANTM) – Get the report: “I would buy more. I also like UnitedHealth Group ((UNH) – Get the report and humana ((TO HUM) – Get the report. “

Beyond meat ((BYND) – Get the report: “I’m a believer and it’s a winner in the long run.”

Snowflake ((SNOW) – Get the report: “I want you to hold onto Snowflake. They will make you money.”

Tuscan stocks ((THCB) – Get the report: “You will have some pain with this one.”

AFLAC ((AFL) – Get the report: “That’s a hot stock. That’s all it is.”

United Micro Electronics ((UMC) – Get the report: “I think it’s a buy at this level. You’re doing well. I agree.”

Emergent BioSolutions ((EBS) – Get the report: “This one is a disaster and that’s nice.”

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At the time of publication, Cramers Action Alerts PLUS held a position in CRM, NVDA, AMD, MSFT.

AT&T ending ‘one of many dumbest mergers in current historical past’

CNBC’s Jim Cramer struck on Monday AT & T. As a shame after the company announced it would outsource WarnerMedia to merge the business and help found an entertainment giant discovery.

He also targeted those who called the move transformative, railing against AT&T for taking out heavy debt three years ago to buy Time Warner for $ 85 billion.

“It’s not a transformation agreement … it’s the final act of one of the stupidest mergers in recent history.”Bad money“The host said.” The truth is, AT&T made a mindless decision and now they’re paying for it, but in American corporations nobody really pays for it, nobody can say it, nobody can admit it. “”

In one $ 43 billion dealThrough the collaboration with WarnerMedia-Discovery, the AT&T shareholders will have a significant stake in the new company. The transaction, which is expected to close in about a year, completes AT & T’s experiment of combining content and distribution into one vertically integrated company.

Cramer accused the phone company of buying a media company and criticized former AT&T CEO Randall Stephenson for receiving a $ 64 million retirement package last year.

“Today’s move is a huge rejection of that nonsense. All the talk about synergies and monetizing AT & T’s close relationship with its customers has been utterly chimerical,” said Cramer. “For me this was an enormous destruction of value.”

AT&T shares fell 2.7% to $ 31.37 while Discovery fell 5% to $ 33.85.

AT&T is a cautionary story as to why investors should be careful about owning high-dividend-yielding stocks, Cramer said. AT & T’s return of nearly 6.7% was a sign that something was wrong with the company or the stock would be higher and the yield lower. And many AT&T shareholders own the stock for the dividend, which has been cut in half, he added.

“This is what happens when you run the most heavily indebted company in America. I can tolerate these mistakes Apple or alphabet or Facebook“, He said.” They would never do anything so stupid, but at least they are sitting on piles of cash so they can afford to make mistakes. “

Disclosure: Cramer’s charitable foundation owns shares in Facebook, Apple, and Alphabet.

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Here is the prize cash payout for every golfer on the 2021 AT&T Byron Nelson | Golf Information and Tour Info

Sam Burns wants to test the “lock gates” theory on Sunday at the AT&T Byron Nelson (and we’re not talking about the PGA Tour’s early start times to avoid the wet afternoon forecast outside of Dallas). The 24-year-old former LSU college player of the year took the 54-hole lead three times in the 2020/21 season and failed to take the first two before finalizing the deal two weeks ago at the Valspar Championship. When Burns finally took his first PGA Tour title, many observers suggested that the increased burden of getting that first win would lead to a possible onslaught of more titles.

Well, at Burns’ next tour start, he’s trying to see if Golf Cognoscenti is getting it right. For the fourth time this season – most of all from any player – he is taking or dividing the lead in a final round. Should Burns get through and win again on Sunday, he would be the first player since Camilo Villegas in 2008 to win his first two Tour titles in consecutive starts. He was also the third player to win multiple events in the 2020-21 “super” season.

The total prize pool payout at TPC Craig Ranch is $ 8.1 million, with the winner receiving $ 1.458 million. Should Burns take first place, he would grow his career profit to $ 6.6 million

Here is the cash prize payout for every golfer at the AT&T Byron Nelson. Come back shortly after the tournament and we’ll update the prize pool for each golfer.