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Mix-Ansicht- Schon vergessen, Tyco? - XERXES, 26.04.2002, 08:49
Schon vergessen, Tyco?
Tyco Investors Lose Faith
4/26/2002 1:34:00 AM
CONCORD, N.H., Apr 26, 2002 (AP Online via COMTEX) -- Tyco International Ltd. has to start producing results fast to regain the confidence of investors who dumped shares after the company scrapped its breakup plan and announced 7,100 job cuts, analysts say.
"Investors are running away because it looks like management doesn't have a strong strategic plan for the long-run," said Rob Plaza, an analyst with Chicago-based Morningstar."There is very little faith in the company right now, and that's why their stock is being punished."
Shares of Tyco plunged nearly 20 percent Thursday after the company announced it was backing away from the breakup plan unveiled in January. The huge conglomerate also said it would close 24 plants.
Tyco said it will keep its plastics division, which it had hoped to sell for as much as $4 billion, and sell its CIT financial division in a public offering.
Shares of Tyco, based in Bermuda but run from Exeter, closed down $5.15 to $20.75 on the New York Stock Exchange. Analysts said the abrupt shift in the company's plans added to Tyco's credibility problems, which started earlier this year with Enron-inspired accounting questions.
"They're not giving investors a lot of reason to trust them right now," Plaza said.
In a conference call, executives said Tyco lost $1.9 billion last quarter and had lowered its profit projections for the year.
Chairman and chief executive Dennis Kozlowski said the breakup plan was simply a mistake.
"In retrospect, it is now clear that we took the market by surprise with our announcement, and failed adequately to take into account the extraordinarily fragile market psychology and hostile environment that has distracted and damaged our business in recent months," he said.
The layoffs, primarily in electronics and telecommunications, account for about 3 percent of Tyco's worldwide work force of almost 250,000, including about 1,200 in New Hampshire. Tyco blamed a"fierce decline" in the electronics and telecommunications markets.
Brad McGee, a Tyco vice president, said six U.S. factories will close. He did not know their locations, but said the employees had been notified.
Tyco's products include electronic equipment, fire and security systems and disposable medical supplies.
Tyco said the $1.9 billion loss, 96 cents per share, for the quarter that ended March 31 contrasted with a profit of $1.1 billion, or 62 cents per share, a year ago.
Revenue slipped to $8.66 billion from $8.81 billion in the same quarter a year ago.
A writedown of assets and other charges in the second quarter totaled $3.3 billion. Excluding the charges, quarterly earnings were 65 cents a share, 3 cents ahead of Wall Street expectations.
The company cut its projected earnings for the fiscal year to $2.60 to $2.70 per share, before charges. Analysts surveyed by Thomson Financial/First Call had projected $3.14.
Tyco said its estimate assumed CIT would remain part of Tyco through the fiscal year, which ends in September.
In a letter to shareholders, Kozlowski said the company is still negotiating to sell CIT but decided that a public stock offering would reduce Tyco's vulnerability to debt markets, make the company less complex and allow it to focus on its core markets.
Kozlowski said senior corporate managers will not receive bonuses this year.
The breakup plan was partly a response to criticism of Tyco's accounting practices and debt load following the Enron scandal.
Officials had said simplifying the company would make its accounting easier to understand.
But reports of alleged accounting irregularities and uncertainty stemming from the breakup plan significantly hurt Tyco's business this spring, company officials said Thursday. They said customers were reluctant to place orders and employees were uncertain of their future.
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