Tyco Revenue Misses Estimate

Earnings roughly double thanks to a low tax rate.
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Tyco

(TYC)

reported sharply higher fourth-quarter earnings Wednesday that benefited from a low tax rate, while revenue was little changed from a year ago and below Wall Street forecasts.

Tyco earned $917 million, or 44 cents a share, in the quarter, compared with $454 million, or 22 cents a share, a year ago. The company paid $7 million in income taxes in the latest quarter compared with $244 million a year ago. The year-ago quarter also had a restructuring charge of $190 million.

Excluding a handful of smaller items and discontinued operations in the most recent quarter, Tyco earned 48 cents a share, beating the Thomson First Call consensus by 2 cents. Revenue was $10.03 billion in this year's quarter compared with $9.99 billion a year ago. Analysts had been forecasting $10.6 billion in the latest period.

Tyco saw operating margins decline in three of its four main businesses, the exception being fire and security, where margins roughly doubled to 11.1%. Fire and security had revenue of $2.89 billion in the most recent fourth quarter, unchanged from a year ago, while operating income doubled to $321 million.

In electronics, revenue fell 1% to $3.06 billion and operating income fell 11% to $430 million. In healthcare, revenue rose 1% to $2.42 billion while operating income shrunk 46% to $338 million. In engineered products and services, revenue rose 2% to $1.66 billion while operating income fell 1% to $157 million.

Tyco estimated first quarter earnings of 40 cents to 42 cents a share including a 2-cent charge related to options expensing. Analysts were forecasting 44 cents a share. For all of 2006, the company expects earnings from continuing operations before special items to rise 10% from 2005.

The shares fell 80 cents, or 2.4%, to $26.60 on Instinet.