Tyco Issues Earnings Warning
Tyco Issues Earnings Warning During First of Weekly Conference Calls for Investors
CONCORD, N.H. Feb. 13
In the first of a new series of conference calls to repair its bruised corporate image, Tyco International Ltd. on Wednesday issued a disappointing second quarter earnings forecast but won points from analysts for being upfront about its financial situation.
Citing added interest expenses, sluggish business in its electronics division and costs associated with negative speculation about the company, Tyco chief financial officer Mark Swartz said earnings for the current quarter could be between 65 cents and 68 cents a share.
Analysts had predicted Tyco would earn 76 cents a share for the quarter ending March 31, according to a survey by Thomson Financial/First Call.
Chief executive Dennis Kozlowski said he hoped the earnings guidance represented a worst-case scenario.
Shares of Tyco fell 5.3 percent, or $1.60, to $28.90 Wednesday on the New York Stock Exchange. But analysts who took part in the call thanked company executives for their willingness to address concerns about the company.
They said it was a welcome contrast to the situation in Washington, D.C., where some Enron Corp. executives have exercised their Fifth Amendment right against self-incrimination in refusing to testify at congressional hearings about the implosion of the energy marketer.
"None of you guys have taken the Fifth, and I want to commend you on that," one analyst told Kozlowski and Swartz, drawing laughs from the 1,400 or so people who listened to the conference call.
A 50 percent decline in Tyco's stock in recent weeks has been attributed in part to worries about the company generated by issues from the Enron scandal. Analysts have expressed concerns that Tyco overstates writedowns for companies it acquires to make itself seem more profitable later.
Kozlowski said Tyco will spell out more details about its acquisitions in a filing Thursday with the Securities and Exchange Commission.
Tyco announced last month it plans to split into four independent companies, and company executives said last week they would expedite the sale or spinoff of the company's lending unit, CIT.
Kozlowski and Swartz defended the breakup plan amid questions from analysts about how it will affect Tyco's ability to pay off its debts.
"Going forward from there, we're going to focus on three things: shareholder value, shareholder value, shareholder value," Kozlowski said.
Steven Altman, an analyst with Commerzbank in New York, said he liked what he heard.
"I think this is fairly unprecedented in my career to see a company have a weekly conference call," Altman said. "I think it goes a long way toward what the company needs to do to increase its credibility."
On the Net:
abcnews.go.com/wire/Business/ap20020213_1372.html
Tyco Issues Earnings Warning During First of Weekly Conference Calls for Investors
CONCORD, N.H. Feb. 13
In the first of a new series of conference calls to repair its bruised corporate image, Tyco International Ltd. on Wednesday issued a disappointing second quarter earnings forecast but won points from analysts for being upfront about its financial situation.
Citing added interest expenses, sluggish business in its electronics division and costs associated with negative speculation about the company, Tyco chief financial officer Mark Swartz said earnings for the current quarter could be between 65 cents and 68 cents a share.
Analysts had predicted Tyco would earn 76 cents a share for the quarter ending March 31, according to a survey by Thomson Financial/First Call.
Chief executive Dennis Kozlowski said he hoped the earnings guidance represented a worst-case scenario.
Shares of Tyco fell 5.3 percent, or $1.60, to $28.90 Wednesday on the New York Stock Exchange. But analysts who took part in the call thanked company executives for their willingness to address concerns about the company.
They said it was a welcome contrast to the situation in Washington, D.C., where some Enron Corp. executives have exercised their Fifth Amendment right against self-incrimination in refusing to testify at congressional hearings about the implosion of the energy marketer.
"None of you guys have taken the Fifth, and I want to commend you on that," one analyst told Kozlowski and Swartz, drawing laughs from the 1,400 or so people who listened to the conference call.
A 50 percent decline in Tyco's stock in recent weeks has been attributed in part to worries about the company generated by issues from the Enron scandal. Analysts have expressed concerns that Tyco overstates writedowns for companies it acquires to make itself seem more profitable later.
Kozlowski said Tyco will spell out more details about its acquisitions in a filing Thursday with the Securities and Exchange Commission.
Tyco announced last month it plans to split into four independent companies, and company executives said last week they would expedite the sale or spinoff of the company's lending unit, CIT.
Kozlowski and Swartz defended the breakup plan amid questions from analysts about how it will affect Tyco's ability to pay off its debts.
"Going forward from there, we're going to focus on three things: shareholder value, shareholder value, shareholder value," Kozlowski said.
Steven Altman, an analyst with Commerzbank in New York, said he liked what he heard.
"I think this is fairly unprecedented in my career to see a company have a weekly conference call," Altman said. "I think it goes a long way toward what the company needs to do to increase its credibility."
On the Net:
abcnews.go.com/wire/Business/ap20020213_1372.html
