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Tyco Slides Despite Cash Flow Blowout

Stung by a report that its accounting woes are about to deepen, the company accelerates its second-quarter earnings release.
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Stung by media reports of another accounting setback,



slipped 3% Wednesday morning even after the company accelerated the release of a surprisingly strong second-quarter cash-flow number.

The struggling conglomerate said its second-quarter loss from continuing operations amounted to 23 cents a share, after a 55-cent accounting charge. That puts operating earnings in line with Wall Street's expectations, not including the charge, which Tyco said was "related to primarily non-cash adjustments arising out of the Company's intensified internal audits and detailed controls and operating reviews, a change to an accelerated amortization method for its ADT-dealer program account assets, and a change in the accounting for the connect fee associated with ADT's dealer program."

Revenue was also in line with estimates, coming in at $9 billion. But the company shocked Wall Street by saying free cash flow for the period was $1.1 billion, which is way ahead of the $450 million-$750 million range Tyco laid out earlier this year.

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The news comes as Wall Street braces itself for the latest

accounting setback at the company, which has been in turnaround mode for more than a year following the departure of its previous management. An article in Wednesday's editions of

The Wall Street Journal

indicated Tyco would uncover some $1.2 billion in new accounting problems when it released second-quarter earnings. That report was due for release Thursday morning, but the company halted its stock and offered the financial guidance Wednesday morning after shares plunged 7% on the



Tyco shares reopened after 11 a.m. EDT, slipping 42 cents to $14.95. The company said it will host a 5 p.m. EDT conference call to discuss the results.