Tyco Axes Security and Fire Chief
Tyco Int’l Ltd. has fired Jerry Boggess as head of the Fire and Security Systems Division, which includes the ADT home security business. David Robinson, who was hired last fall from Motorola to lead Tyco’s plastics and adhesives business, was tapped to replace Boggess.
Boggess had served as president of the Fire and Security Systems Division since 1995.
In addition to the change in management, the company says it would close 300 plants throughout a three-year period, cutting $1 billion in costs by 2006. “I’ve got a zero-tolerance policy,” Tyco CEO Edward Breen said at a conference for analysts in New York Thursday, reports Associated Press. “If I find anything wrong, they’re out of here, heads are rolling… we’re not putting up with anything.”
Tyco says it will scale back its manufacturing facilities to 1,700 by 2006, slashing its manufacturing space by 20 million square feet. One area targeted for improvement in the Fire and Security Systems Division is keeping customers longer by doing a better job selecting them. The attrition rate, or the rate at which customers cancel, rose to 13.8 percent in the fiscal first quarter, from 13.2 percent last year and 12.3 percent in fiscal 2001.
For the quarter ending March 31, Tyco estimates it expects to take pretax charges of between $265 million and $325 million to resolve accounting problems at the fire and security unit’s European operations. It also plans to generate revenue of up to $44 billion in 2006, up from an estimated $38 billion this fiscal year, which ends Sept. 30. Profit is expected to top $4.9 billion in 2006, up from about $3 billion this year.
Meanwhile, Tyco executives says the IRS is auditing the company’s tax filings for 1997 through 2000. They say the audit is “nothing unusual.”
John Boland, an analyst at NL Capital Management, which owns about 500,000 Tyco shares, told Reuters that the market is really not taking any of the news well. “I don’t know how comfortable the market is with the radical makeover that’s being detailed,” he said.
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