Tyco Int’l beats estimates but “organic” sales weak
May 1st, 2008 | by admin |NEW YORK (Reuters) - Tyco International Ltd (TYC.N: Quote, Profile, Research) reported higher-than-expected quarterly earnings from continuing operations on Thursday, but its shares fell 4 percent in early trading on concerns about the pace of sales growth.
Tyco’s so-called “organic” sales growth was 3.6 percent in the quarter, below the 4 percent to 5 percent range the company had predicted in February and below some analysts’ estimates.
Tyco’s ADT security unit and its flow control division, while posting higher sales and profits, were the “major drivers of downside,” Deutsche Bank analyst Nigel Coe said.
ADT suffered from a decline in installs and service, primarily into retail, while flow control suffered from … project delays,” Coe said in a research note.
A lower-than-expected tax rate accounted for much of the earnings beat, Coe added.
Tyco reported income from continuing operations before special charges of $326 million, or 67 cents a share, in the second quarter that ended March 28, almost double the year-earlier $167 million, or 33 cents per share.
Analysts on average were expecting 58 cents per share, according to Reuters Estimates.
JP Morgan analyst Stephen Tusa also said a favorable tax rate supported results, but called them “a solid beat” and said a strong order backlog suggests profits may accelerate in the second half of Tyco’s fiscal year.
Overall revenue rose 8 percent to $4.87 billion, compared with Wall Street forecasts of $4.98 billion.
