Tyco Swings to Profit on Lower Charges
Monday, November 1st 2004, 10:49 am
By: News On 6
TRENTON, N.J. (AP) _ Industrial conglomerate Tyco International Ltd. swung to a fourth-quarter profit on a double-digit jump in sales and on lower one-time charges compared to the year-ago quarter.
Separately, the West Windsor-based company on Monday announced an agreement to sell its undersea fiber optics telecommunications network for $130 million to Videsh Sanchar Nigam Ltd., the leading telephone and Internet service provider in India.
The deal is part of Tyco's strategy to shed noncore businesses and cut costs but it must be approved by government regulators in several countries.
Tyco shares jumped 41 cents, or 1.3 percent, to $31.56 in early trading on the New York Stock Exchange.
Tyco, best known for its ADT Security Services business, reported net income of $454 million, or 22 cents per share. Excluding one-time charges totaling 23 cents _ for early retirement of debt, restructuring and divestitures _ net income would have been 45 cents per share.
Analysts surveyed by Thomson First Call had been expecting net income of 43 cents per share.
Tyco posted a net loss of $297 million, or 15 cents per share, in the July-September quarter of 2003.
``We concluded the restructuring program announced last year, finishing ahead of schedule,'' Ed Breen, Tyco's chairman and chief executive officer, told analysts in a Monday morning conference call.
Breen, who took over for former executive L. Dennis Kozlowski in July 2002, said the restructuring should bring about $285 million in savings per year, more than the original estimate of $230 million. The restructuring cost $417 million, including $216 million of charges in the latest quarter.
Under the program, Tyco has closed 227 facilities, exited 27 businesses, contracted to sell an additional six businesses and eliminated 8,100 positions out of about 260,000 worldwide.
Revenues in the third quarter rose nearly 13 percent to $10.4 billion from $9.3 billion a year earlier.
Sales jumped 15 percent to $3.1 billion in the electronics division, 10 percent to $2.4 billion in the health-care division and 37 percent to $1.6 billion in the engineered products and services segment. Sales edged up only 4 percent in the fire and security division, to $2.9 billion, and in the tiny plastics and adhesives division, to $453 million.
The company forecast earnings per share of $1.88 to $1.98 for its 2005 fiscal year and 40 cents to 42 cents for the first quarter. Analysts surveyed by Thomson First Call are expecting $1.96 and 44 cents, respectively.
For the full year, Tyco reported net income of $2.88 billion, or $1.35 per share. That was nearly triple the company's earnings in the prior fiscal year of $980 million, or 49 cents per share.
Revenues for the full year increased nearly 12 percent to $40.15 billion from $35.99 billion a year earlier.