Tyco Guides in Line

Revenue rises 5%.
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Tyco

(TYC)

posted a drop in third-quarter earnings but beat Wall Street's revenue estimates. The conglomerate also offered in-line guidance for the year and agreed to sell its printed circuit business for $226 million.

The Pembroke, Bermuda, company made $868 million, or 42 cents a share, down from the year-ago $1.19 billion, or 56 cents a share. Latest-quarter numbers included a 3-cent charge for a fire sprinkler head replacement program, a 3-cent company separation charge and a penny-a-share loss from discontinued operations.

Revenue rose to $10.5 billion from $10 billion a year earlier, as organic revenue growth, excluding the effect of acquisitions, was 5%. The company generated cash flow from operating activities of $1.5 billion and free cash flow of $1.1 billion in the quarter, which included $71 million in cash payments for the previously disclosed

Securities and Exchange Commission

settlement and separation activities.

Analysts surveyed by Thomson Financial were looking for a 48-cent profit on sales of $10.46 billion.

"This was another quarter of sequential progress for Tyco, with continued revenue growth, improved operating performance and solid cash flow," said CEO Ed Breen. "We are also making good progress with our separation activities and remain on track to complete the transactions by the end of the first calendar quarter of 2007."

During the third quarter, Tyco used $1.1 billion in cash to buy back 41 million shares. In addition, Tyco spent $134 million to repurchase 5 million shares in early July. Since the start of the fiscal year, Tyco has repurchased 76 million shares, representing 3.5 percent of diluted shares outstanding.

For the fourth quarter of 2006, the company expects to achieve EPS from continuing operations, excluding special items, of 47 cents to 49 cents. For the full year, this would result in EPS from continuing operations, excluding special items, of $1.80 to $1.82 per share. Analysts were looking for 50 cents for the quarter and $1.82 for the year.