Cramer Revists DivX, But Not the Way You Would Guess

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Cramer also wanted to review another "do you know what you own" on MAD MONEY tonight.  A hot stock that has been on fire is DivX (DIVX).  He was positive on it on at $18+ and now it is up about 50% from there.  As far as what they do and if they are worth owning:

It makes video compression software that it licenses to DVD player companies that stream and download.  He noted the Google relationship as well as the company having great opportunities in Eastern Europe and in India because those other expensive video formats are too expensive to license.  As far as if 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 untilmarch.  Cramer thinks that may keep a lid on it until then and it could sell shares.  Their actual market is hard to guage the real size of it because it is a niche within a huge market and it comeptes with Real Networks and Microsoft.  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 is now down in after-hours after he said to avoid it.

Jon C. Ogg
December 20, 2006