Jim Cramer has long said to wait to hear from management on conference calls before buying names where guidance is held back. That advice could have saved Microsoft Corp (NASDAQ:MSFT) investors a good chunk of change following Tuesday's quarterly results.
What Happened: Microsoft reported fiscal second-quarter earnings after the close on Tuesday and the stock surged higher taking several cloud names with it.
Nearly two hours after the report was released, Microsoft shares reversed and turned negative after CFO Amy Hood told analysts and investors the cloud giant saw customers exercise caution through December, which led to weaker results and "moderated consumption growth" in Azure.
"We expect the business trends that we saw at the end of December to continue into Q3," Hood warned.
Why It Matters: Cramer indicated that those who purchased shares before Microsoft's conference call lack discipline.
"Those people who bought it ahead are some of the dumbest people I've ever seen," Cramer said Wednesday morning during his first take segment on CNBC's "Squawk Box."
Everyone knows that the direction Microsoft shares ultimately end up heading hinges on comments from Hood each quarter, Cramer said.
"It's stupidity, and yet it just keeps happening," he emphasized: "I find it rather amazing that people could be so dumb continually."
Dennis Dick, co-host of Benzinga's "PreMarket Prep," didn't fall for the fakeout. He even took to Twitter to warn people ahead of the call.
"What's @jimcramer always say? Wait for the conference call. I think it applies to $MSFT," Dick tweeted.
"Remember that time $MSFT sold off on earnings and then reversed and went higher on the conference call. Keep that in mind tonight," Dick said in another tweet ahead of the call.
Benzinga's PreMarket Prep airs daily on YouTube at 8 a.m. ET. The show covers premarket movers, earnings for the week, economic data and more, featuring professional traders Dennis Dick and Joel Elconin. You can subscribe to Benzinga's YouTube channel here.
MSFT Price Action: Microsoft has a 52-week high of $315.95 and a 52-week low of $213.43.
The stock was down 0.80% at $240.20 at the time of publication, according to Benzinga Pro.
Photo: Owen Byrne from Flickr.