clock menu more-arrow no yes

Filed under:

Tyco reports its income doubled

TRENTON, N.J. — Manufacturing conglomerate Tyco International Ltd. said Wednesday it plans to close more than a dozen factories and possibly split up its wide-ranging businesses in efforts to boost the value of its stock. The company also reported its fourth-quarter income doubled because of a tax-rate adjustment and one-time gains.

Including the one-time gains and losses, Tyco's results were in line with the company's own expectations and met those of analysts surveyed by Thomson Financial, who predicted income of 44 cents per share for the December quarter.

For the quarter ended Sept. 30, the West Windsor-based company's income rose to $917 million, or 44 cents per share, up from $454 million, or 22 cents per share, in the year-ago quarter.

Income from continuing operations rose to $876 million, or 42 cents per share, from $576 million, or 27 cents per share.

Tyco shares rose $1.10, or 4 percent, to close at $28.50 Wednesday on the New York Stock Exchange.

In a conference call with analysts, CEO Ed Breen said the company would close 16 large factories within the next two years to improve profits in its electronics businesses. While he did not identify locations for closures, he noted that sales growth in electronics had slowed in the United States and Europe but is growing in Asia.

Tyco's electronics group employs 87,000 people and has 146 manufacturing locations globally. Fifty-six factories are in the United States — with key facilities in central Pennsylvania and North Carolina; western Europe has 36 factories.

"We are very good at doing design and living next door to our customer. We've been moving with them," Breen said. "It's the reason we've got 30,000 Tyco electronics employees right now in China in 21 locations."

He also said he believed the company's stock has been undervalued for the past several months, and that Tyco is exploring a "full range" of options to change that — from continuing to repurchase stock to splitting up the company. He declined to provide further detail, but his words caught the attention of many analysts.

"Three days ago I would have told you three to five years before they would contemplate something that dramatic," said David Bleustein, an analyst with UBS.