Tyco Moves to Reassure Stockholders
PEMBROKE, Bermuda
In a conference call held with analysts Wednesday, Tyco Int’l Ltd. says it plans to answer questions weekly from investors to ease concerns about financial disclosure and accounting issues, a move it hopes will calm their fears and restore confidence in the company. Tyco CEO Dennis Kozlowski said Wednesday that he will work hard to improve the company’s credibility with the public.
He also said Tyco will expedite the sale or spinoff of its lending unit and emphatically rebutted speculation that it might be the next Enron. Investors apparently liked what they heard, sending Tyco shares up 12 percent — after the company’s stock hit 52-week lows
Monday and Tuesday because of concerns about the company’s finances and accounting practices.The big conglomerate’s shares closed Wednesday at $25.92, up $2.82, on the New York Stock Exchange. Tyco stock slid 23 percent Tuesday and 19 percent Monday.
Kozlowski said a barrage of calls in recent days has convinced him the company must do better at public relations. He said Tyco now will hold weekly conference calls with investors.
He also bluntly denied speculation that the company could have problems like those that helped Enron, the failed energy trading giant, collapse and file for bankruptcy protection.“We have an absolutely terrific company here that is very well financed, that is liquid, highly liquid. It has no comparisons to any failed company out there at all in terms of products, culture, secret financing arrangements, management, anything like that,” Kozlowski said.
To help reassure jittery investors, Kozlowski said Tyco will spin off Tyco Capital—which will revert to its previous name, CIT Group—in the next eight to 12 weeks.
Continuing suspicions about Tyco’s accounting and several lawsuits have hurt it in recent months and were exacerbated by the Enron scandal.
Tyco announced two weeks ago that it planned to split into four independent companies — health care products; fire protection and flow-control systems; commercial lending; and security systems and electronics. It said the goal was increasing value for shareholders.
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