There's A Village Somewhere Missing an Idiot update from October 2009

Jim Cramer says "Get out of data center stocks. Sell, sell, sell."

Rich Miller

October 23, 2009

2 Min Read
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I normally try to deal in information, not punditry. But this morning I cannot fend off the impulse to share this opinion: When it comes to data centers, Jim Cramer is dumber than a bag of hammers.

Seeking to have something relevant to say in the wake of the Equinix-Switch and Data deal, Cramer decided to highlight the data center sector Thursday on his "Mad Money" show on CNBC. To demonstrate his familiarity with the sector, Cramer twice referred to Equinix as "Equinox."

"Get out of the data-center stocks," Cramer told viewers. "I think the data center industry is in decline. I see an industry that’s about to be brought low by new technology, so I think you should sell, sell, sell."

New technology?
Which new technology? Cloud computing? Believe it or not, he means Nehalem processors. Cramer notes that on Intel's recent conference call, the company touted strong sales for its new family of Nehalem DP processors for servers, one of which can "take the place of eight to nine older-generation servers." Cramer did some math, and concluded that data centers will soon be seven-eighths empty.

"Data centers like Equinix will still have all this extra space on their hands that they'll have no idea what to do with, thanks to Intel's revolutionary server technology," said Cramer. "These new servers go a long way towards making the data center model obsolete."

Moore's Law wasn't invented yesterday. Processors have been getting faster and more powerful for decades without fundamentally altering the demand for data center space, which is driven by a profound, long-term shift toward the Internet and digital business models. That isn't likely to change anytime soon. Nehalem processors will allow companies to do more with less, but they're not going to empty out all the data centers. 

Here's the video of Cramer's comments: 

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