Tyco Posts $1.75B Quarterly Loss; Fire and Security Up 27% For 2002
Tyco Int’l Ltd. reports a $1.75 billion quarterly loss and
restated results for the first nine months of fiscal 2002
ending Sept. 30, but its shares surged 12 percent after it
said a nearly completed review of operations is not
expected to reveal massive fraud. For the year, Tyco posted
a net loss of $9.1 billion on revenue of $35.7 billion.
Reuters reports that investors embraced remarks made by David Boies, a lawyer hired by Tyco to oversee an audit of the conglomerate’s businesses. Tyco’s accounting has been under a dark cloud all year amid persistent worries the company’s previous leadership artificially boosted earnings. “I would be very, very surprised if we uncovered a very large fraud at this stage,” Boies said during a conference call with investors and analysts.
Revenue from Tyco’s fire and security division increased 27 percent year throughout year and 6 percent from the previous quarter. The company says the increase is primarily the result of acquisitions, such as Sensormatic, SecurityLink, Edison and the ADT Authorized Dealer sales programs. This is slightly offset by a decline in the North American fire protection business.
The company expects revenue growth in security to slow as it scales back its dealer sales program, and fire protection revenue to be moderate as well. The company says its fire businesses performed well in 2002 due to a strong backlog, but weakness in industrial construction markets is expected to negatively impact the segment in 2003.
Investors appeared to look past the restatement of three quarters of results at Tyco’s ADT security unit. Tyco said about $135 million of income was booked too soon, and would be recognized in future quarters. Tyco currently faces an estimated $1.5 billion shortfall on debt that is due late next year.
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