Tyco 2Q profit falls 67 percent after shedding businesses

Despite the large hit, the company still beat Wall Street expectations significantly.

The diversified manufacturer, best known for its ADT alarm systems, said Thursday that its net income fell to $280 million, or 57 cents per share, in the quarter ended March 28. A year ago before the conglomerate split into three companies to sharpen their focus it posted net income of $835 million, or $1.66.

The "new Tyco," as one executive termed it, posted income from continuing operations of $273 million, or 56 cents per share. Excluding some charges, earnings at the trimmed-down company amounted to 67 cents per share.

That was a dime better than the 57 cents expected by analysts surveyed by Thomson Financial, who typically exclude one-time items. But analyst Nicole Parent of Credit Suisse noted in a report that about 5 cents came from a relatively low tax rate, 23.1 percent. That will rise, as executives said they expect a rate of about 25 percent for the full year.

Revenue climbed 8 percent, to $4.87 billion, slightly less than the $4.94 billion analysts were expecting. Favorable currency exchange rates boosted sales about 5 percent.

Shares of Tyco, which is nominally based in Bermuda but has operational headquarters in West Windsor, N.J., fell 2.4 percent on Thursday.

Looking ahead, the company raised its fiscal 2008 profit forecast to a range of $2.65 to $2.75, up 5 cents from its January forecast, citing its strong first-half performance and improved outlook.

"Overall, we had a good quarter and made solid progress in executing our key initiatives," Ed Breen, chairman and chief executive officer, told analysts during a conference call. "We continue to grow our revenue and make improvement in our operating margins across all our businesses."

Breen noted the company has a deal to acquire FirstService Security, to strengthen ADT, and expects to receive more than $1 billion from divesting three noncore businesses: Ancon Building Products, sold April 30; Nippon Dry-Chemical, sold Feb. 29, and Infrastructure Services, to be sold soon.