Updated from 8:51 a.m. EDT
, facing new allegations about booking profits on a money-losing investment, sharply lowered its earnings guidance for its fourth quarter Wednesday.
The company also set a $2 billion to $2.5 billion charge to write down its undersea fiber-optic cable network, TyCom. Chief Executive Ed Breen told a conference call that a probe into the company's accounting is a little less than halfway done, and so far has turned up no irregularities. That statement was evidently behind an 8% jump in the company's shares on the Instinet premarket session.
Tyco said it expects to report earnings per share of 30 cents to 33 cents, down from previous guidance of 45 cents to 47 cents, on flat sequential revenue. The previous consensus had expected a 1.3% rise in revenue. The company pointed to a new tax rate, a weak electronics market and no improvement in payables for the lowered expectations.
The company reportedly claimed a profit on a money-losing investment and used the false gain as an excuse to pay nearly $24 million in bonuses to former chief executive Dennis Kozlowski, former chief financial officer Mark Swartz and other executives,
The New York Times
reported Wednesday. Details of the transaction, which occurred 15 months ago, are raising questions among some accountants about the accuracy of the company's past quarterly statements. Both Kozlowski and Swartz are under indictment for previous charges.
The transaction appears to have provided a loss for Tyco, which paid an above-market price for an 11% stake in a small company called Flag Telecom, which is now bankrupt. But last week, Tyco disclosed it claimed a profit of $79.4 million on the transaction, and that this profit was used to justify the bonuses.