• CNBC's Jim Cramer on Wednesday discussed the tricky nature of bad quarters, saying management needs to explain and not gloss over any misses or poor results.
• "Memo to CEOs everywhere: each gutter ball, every strike out, must be explained or we'll be concerned that you simply don't take the process seriously," he said. "If you don't want to face the music, then you need to give us the happy family of good results and a sunny forecast."

CNBC's Jim Cramer on Wednesday discussed the tricky nature of bad quarters, saying management needs to explain and not gloss over any misses or poor results.

"Memo to CEOs everywhere: each gutter ball, every strike out, must be explained or we'll be concerned that you simply don't take the process seriously," he said. "If you don't want to face the music, then you need to give us the happy family of good results and a sunny forecast."

Cramer said every earnings shortfall is "nuanced beyond belief," with some more difficult for Wall Street to parse than others. Investors, he said, react badly to opaque or confusing information, and it's up to management to paint a clear picture of business, even if it's less than ideal.

He reviewed several recent reports — that of semiconductor outfit AMD, pharmaceutical giant Eli Lilly and Wingstop — explaining why and how they failed to impress.

According to Cramer, AMD did well, but not well enough for many, reporting a slight revenue beat and earnings in line with expectations. The company is competing with artificial intelligence powerhouse Nvidia, and investors were looking for blow out results, he continued. AMD's stock down more than 10% by Wednesday's close. Eli Lilly's report also sent shares sliding, posting both a large earnings and revenue miss. The company, which had been seeing success with its popular weight loss and diabetes drugs, failed to properly explain its shortfall, Cramer said. And while management from Wingstop highlighted the bright spots of the quarter, they largely did not acknowledge the earnings miss, he continued.

"It's like a criminal trial: if you're obviously guilty and you refuse to accept a plea bargain, the judge is going to throw the book at you," Cramer said.

AMD, Eli Lilly and Wingstop did not immediately respond to request for comment.

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Disclaimer The CNBC Investing Club Charitable Trust holds shares of AMD. Nvidia and Eli Lilly.

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