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Tyco's 2nd quarter earnings rise

Tyco International Ltd. on Tuesday reported sharply higher quarterly earnings, topping its own estimates, led by strong performances in its health-care, engineered products and electronics units.
/ Source: Reuters

Tyco International Ltd. Tuesday reported sharply higher quarterly earnings, topping its own estimates, led by strong performances in its health-care, engineered products and electronics units.

Tyco, which is still working to shed the trappings of an accounting scandal that rocked the conglomerate two years ago, said net income for the fiscal second quarter ended March 31 rose to $782.4 million, or 37 cents per share, from $124.3 million, or 6 cents per share, a year earlier. Revenue rose nearly 12 percent to $10.04 billion from $8.99 billion.

Included in the results were 4 cents per share in charges associated with restructuring and divestiture programs.

Tyco, whose products range from duct tape to diapers and headache treatments to burglar alarms, has been working to shed dozens of businesses picked up during a 1990s acquisition spree spearheaded by its now-discredited former management.

Excluding the charges, Wall Street analysts had been looking for earnings of 36 cents per share on revenue of nearly $9.6 billion, according to Reuters Research, a unit of Reuters Group Plc. In February, Tyco had forecast earnings of 35 cents to 37 cents per share before any charges.

Looking ahead, Tyco said it expects third-quarter earnings of 39 cents to 42 cents per share. That compares with a current Wall Street forecast of 40 cents per share on revenue of $10.01 billion, according to Reuters Research.

Taking into account the outperformance in the second quarter, Tyco pushed up its full-year earnings forecast to a range of $1.52 to $1.58 per share from its previous range of $1.42 to $1.52. It also raised its estimate for operating cash flow to $5.7 billion from $5.4 billion.

“Since the beginning of our fiscal year, we have seen an improvement in our end markets and we feel better about the global economy,” Tyco Chairman and Chief Executive Officer Ed Breen said in a statement. “As a result of these improved business conditions and our operational progress, we are raising our outlook.”

Tyco’s healthcare and electronics units reported the biggest revenue gains in the quarter, up 32.6 percent and 12.1 percent, respectively. Engineered products and services revenue rose 8.8 percent.

Excluding the effects of acquisitions and the divestiture program and the benefit of the weak dollar, engineered products revenue rose 7.8 percent, electronics revenue was up 5.2 percent and healthcare revenue increased 4.2 percent.

Tyco, based in Bermuda, has been selling assets, restructuring operations and straightening out its books for two years in a bid to recover from the accounting scandal that led to its former chief executive and chief financial officers being tried on charges of looting the company of $600 million.

The trial of Dennis Kozlowski and Mark Swartz ended in a mistrial last month. Prosecutors have said they intend to retry the case.

In last year’s second quarter Tyco originally had reported a loss of nearly half a billion dollars after unearthing another batch of accounting problems. But seven weeks later, it restated nearly five years of earnings, resulting in it having a profit for the period.

Tyco shares on Monday closed at $27.98 on the New York Stock Exchange. Since hitting a two-year high of $30.26 in early March, the stock has trailed off a bit, trading in a range of about $27 to about $29.50.