Tyco Reports 3rd-Quarter Profit
Tyco Int’l Ltd. July 29 reversed a $2.6 billion year-ago
loss with a quarterly profit as the conglomerate restated
past financial results and detailed several trouble spots
at key divisions.
Tyco earned $566.5 million, or 27 cents per diluted share, in the fiscal third quarter, compared with a net loss of $2.6 billion, or $1.32 a share, a year earlier. The company said a weak dollar boosted quarterly revenue to $9.4 billion from $9.1 billion in the year-ago quarter. The weak dollar drove $528 million worth of revenue benefit at its operations.
“We made fundamental progress in the third quarter toward positioning our operations for long-term success,” chairman and chief executive Ed Breen said in a statement. “At the same time, I am confident we can and must improve our profit performance, and I am committed to aggressively implementing the operating discipline necessary to achieve this.”
Tyco said its global security customer disconnection rate increased a half percentage point to 14.9 percent in the quarter because of past zero down payment programs in Europe and contracts acquired from independent U.S. security dealers.
Since Breen’s arrival a year ago, Tyco has raised customer credit standards to address rising disconnection rates. Under former Tyco Chairman Dennis Kozlowski, Tyco boosted revenue, in part, by signing up customers with spotty credit histories.
Breen said the Fire & Security division, which includes ADT, continues to be in a “turnaround situation” under new management. But he cited the unit’s good cash flow.
As expected, Tyco restated financial results that affects performance dating to 1998 following discussions with the U.S. Securities and Exchange Commission over the accounting methods used during Kozlowski’s 10-year tenure. Tyco said it does not anticipate the restatement will have any adverse impact on future results.
Breen said a preliminary decision on small asset sales at the conglomerate could come in September when top executives meet with board members for a two-day strategy review. None of Tyco’s major divisions are on the sale block, but pieces of up 10 percent of the conglomerate could be divested, he said.
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