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Time to Decide About Raytheon

Cramer has to choose whether to keep the company on his list now that its earnings are out.
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Dear Action Alerts PLUS Subscriber,

I've been saying for weeks that if Raytheon (RTN) disappointed once again, I'd sell the stock out of my portfolio. The company reported a decent fourth quarter this morning, but lowered 2004 guidance because of pension expenses.

Management did maintain its guidance for $1 billion of free cash flow in fiscal 2004 though, which is more than enough the cover the 2.5% dividend yield. But the company has been stuck in a rut that it just can't seem to climb out of for a few quarters.

I don't think Raytheon is going to receive a takeover bid anytime soon, and the more I look at my 1,500 shares, the more I think this is $50,000 and a slot on the position sheet that could be freed up for a new name. After you read this note, I'm going to sell my final 1,500 shares.

P.S. What do we do with Zoran (ZRAN) ? As ominous as the delay in the earnings release sounds, I don't think it's for any negative reason. The company did make a large acquisition during the year, and there are a number of potentially harmless reasons for the auditing delay. With that in mind, I'm holding on to my 1,500 Zoran shares for the time being.

Regards,

James J. Cramer

DISCLOSURE: At the time of publication, Cramer was long Raytheon and Zoran.