Tyco Int'l sees tough fiscal 2010, shares slip
Industrial conglomerate Tyco International Ltd
The maker of security and fire-control systems expects demand to remain soft through the first half of its current fiscal year -- which began in late September -- and set revenue and profit targets that allowed for the possibility of declines.
We have assumed that the current environment continues well into the year... with some modest -- and I emphasize modest -- pickup in the second half of the year, Chief Executive Ed Breen told investors on a conference call.
The company looks for sales to fall at a low-double-digit percentage rate through the first half of the fiscal year, with the rate of decline slowing in the third quarter and growth perhaps returning by the fourth quarter, Breen said. Recent cost-cutting measures could help boost Tyco's bottom-line performance when revenue starts to pick up, he added.
Analysts noted the company tends to be cautious in its forecasts -- pointing out that news came on a day that Tyco reported fourth fiscal quarter results that topped Wall Street's expectations.
Their outlook is conservative, said Buckingham Research analyst Edward Wheeler. They have been exceeding their expectations as they've gone along so I think it's all in line with the history of conservative guidance that they've had for the last year.
Tyco shares have risen some 64 percent so far this year, sharply outpacing the 7 percent rise of the Dow Jones U.S. diversified industrials index <.DJUSID>.
SETS 2010 OUTLOOK
Tyco expects first-quarter profit from continuing operations of 48 cents to 50 cents per share on a drop in organic revenue of 11 percent to 13 percent. Analysts, on average, had looked for profit of 56 cents per share excluding one-time items, according to Thomson Reuters I/B/E/S.
For the year, the company expects a profit of $2.30 to $2.50 per share, excluding one-time charges, on $17 billion in revenue. Wall Street had looked for profit of $2.45 per share on revenue of $17.14 billion.
Tyco shares fell 98 cents to $34.41 in early trading on the New York Stock Exchange, reversing pre-market gains.
Tyco this year moved its incorporation to Switzerland from Bermuda, a move that cost it its spot in the Standard & Poor's 500 index <.SPX>.
The company also reported a fiscal fourth-quarter profit that exceeded analysts' forecasts, boosted by lower costs.
Net income fell 53 percent to $205 million, or 43 cents per share, in the quarter, ended on September 25, from $434 million, or 91 cents per share, a year earlier.
Earnings from continuing operations, excluding special items, came to 61 cents per share, beating analysts' average forecast of 54 cents.
Revenue fell 16 percent to $4.4 billion, edging past an average Wall Street estimate of $4.3 billion.
(Reporting by Scott Malone; additional reporting by Christopher Kaufman in New York; Editing by Lisa Von Ahn, John Wallace, Dave Zimmerman)
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