Tyco Decides Not to Divide, Apologizes to Shareholders
Tyco Int’l Inc. announces that management has
decided not to split the company up. The plan, announced in
January, was to break the conglomerate into four separate
companies. However, news of the strategy sent Tyco’s stock
price tumbling. Nearly $70 million in company value has
been erased since the giant announced the breakup.
This latest announcement has done nothing to ease
shareholder fears. In the first 20 minutes of trading
following the announcement Tyco shares fell 20 percent,
sending the stock price near the $20 mark, a level below
which its prices have not dipped since 1997.
In an attempt to soften the blow to management’s
credibility, Dennis Kozlowski, chairman and CEO of
Tyco, says, “But we now know it was a mistake. As your
chief executive officer, I take full responsibility and am
aware that Tyco’s management has let you down.”
In related news, the company announces that it lost $1.9
billion, or 96 cents per share, in its second fiscal
quarter, ended March 31. This compares with a loss of $1.1
billion, or 62 cents per share, for the same period in
2001. The company slashed its earnings outlook for this
year from $3.17 per share to between $2.70 and $2.60 per
share. The loss broke Tyco’s 10-year string of quarterly
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