Tyco earnings better than expected
NEW YORK--Tyco International on May 4 announced better than expected second quarter earnings. That's great news for Tyco, said Jack Mallon, managing partner with Mallon Associates, but he noted that sales were down somewhat for the security portion of the company.
"Overall, it's a solid performance and a big plus for Tyco, but when you focus in on the security piece, you see it remains flat. The sales are down $1 million," Mallon said.
In January, when Tyco announced it would split into three separate publicly traded companies, Mallon predicted the move could "bring about a long awaited new direction for the company," if the move served as a "catalyst for them to expand their security operation either organically or through acquisition." However, Mallon noted that it's too early to see any real effect from the intended split.
"At this point, it's not been broken up," he said. "It's still humming along in the old form, and if anything, this does indicate that the division needs to be jumpstarted," Mallon said.
"The hope is that as a standalone, [the Tyco security division] may be able to break out of lethargy, which they have been in over past two years," he said.
According to Reuters, Tyco reported net earnings of $1.02 billion, or 49 cents per share, compared to $192 million or 10 cents per share one year ago.
Sales were $10.2 billion, which matched Wall Street forecasts, Reuters said. According to the report, Tyco said it "expected third quarter earnings from continuing operations of 46 cents to 48 cents, excluding special items. It said it expected improvement in its health care and fire and security businesses."
A Tyco statement about the second quarter earnings, said in the Fire and Security division, "Organic revenue growth was three percent, with strength in the Worldwide Fire Services business and Tyco Safety Products, as well as modest revenue growth in Worldwide Security due to improvement in both the residential and commercial businesses." The statement further said that, "income resulting from growth in the Worldwide Fire Services business and Tyco Safety Products was offset by lower margins in Worldwide Security."
Tyco also announced that it had authorized a new $2 billion share repurchase program.