Tyco Electronics Ltd. said on Wednesday it lost almost $1.4 billion in its initial quarter as a stand-alone company, reflecting the settlement of lawsuits against former parent Tyco International Ltd. and other costs.
Operating income missed Wall Street forecasts as compiled by Reuters Estimates, which excluded charges for the shareholder litigation settlement, separation-related costs, debt retirement and restructuring. Sales were also lower than expected.
CEO Tom Lynch told analysts on a conference call that the company is aiming for profit margins above 15 percent within three years. It plans to exit lower-margin businesses like power systems, and will spend up to $500 million by 2010 to restructure its manufacturing operations to cut costs.
Lynch also said he saw an indication we're bottoming in the U.S. auto sector, one of the company's biggest markets, citing order rates over the past few weeks.
The maker of connectors and other components used in cars, telecommunications and power systems said it lost $1.37 billion, or $2.75 per share, in the third quarter ended June 29.
A year ago, when the company was still a division of Tyco International Ltd., it posted a profit of $298 million, or 60 cents a share.
Adjusted operating income was $461 million, or 49 cents per share. The analysts' average forecast was 51 cents a share, Reuters Estimates said.
Tyco Electronics said profit margins fell, citing lower production levels and an unfavorable product mix, while revenue rose 6 percent to $3.41 billion, compared with Wall Street forecasts for sales of $3.44 billion.
Three of the company's four divisions reported higher quarterly sales but only one -- undersea telecommunications, its smallest -- reported higher income from operations.
Tyco Electronics said orders from international auto and industrial markets were growing, while orders were down in the computer market and most North American markets.
The company said it expects fourth-quarter sales growth of 5 percent to 8 percent and an operating margin of 13 percent to 13.5 percent before items.
The company's shares were little changed in early trading on the New York Stock Exchange, up 4 cents to $34.89.