boston.com Business your connection to The Boston Globe

Tyco doubles profit, plans to shut 16 plants

TRENTON, N.J. -- Manufacturing conglomerate Tyco International Ltd. said yesterday 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 quarter.

For the quarter ended Sept. 30, the West Windsor, N.J.-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 yesterday on the New York Stock Exchange.

In a conference call with analysts, chief executive Ed Breen said the company would close 16 large factories within the next two years to improve profits in its electronic 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 the company is exploring a ''full range" of options, 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.

Tyco has been aggressively repurchasing its own stock, spending $1 billion in the quarter to repurchase shares, Breen said.

Carter Shoop, a senior analyst with Deutsche Bank, said that a spinoff of the electronics or healthcare divisions is possible, if the stock price does not rise.

SEARCH THE ARCHIVES
 
Today (free)
Yesterday (free)
Past 30 days
Last 12 months
 Advanced search / Historic Archives