Tyco launches radical shake-up

Tyco's telecoms network is up for sale

US conglomerate Tyco, whose former bosses are currently on trial for theft and corruption, is to slash 7,200 jobs and exit dozens of businesses in an attempt to get itself back on track.

The main casualty will be Tyco's loss-making undersea fibre-optic cable, TGN, which is to be sold.

Some 50 other minor business lines are to be closed, representing 6% of Tyco's $36bn in revenues.

The restructuring has cost the firm $1.2bn, but has cheered the markets, where many investors were concerned about Tyco's sprawling business portfolio.

Tyco's shares rose by 5% on the announcement.

Slimming down

Tyco chairman Edward Breen, who was hired last year to replace disgraced former boss Dennis Kozlowski, hopes to win back the affection of the once-adoring financial markets.

Mr Kozlowski, together with ex-finance director Mark Swartz, is accused of taking $600m (£361m) from Tyco from the company to fund lavish lifestyles.

The two face charges of theft, enterprise corruption and lesser offences - including filing false business records and conspiracy.

Tyco was one of the most fashionable firms on the New York Stock Exchange during the 1990s, because of its legendary ability to squeeze returns out of unglamorous business such as medical equipment and security services.

Now, the company is seen as hugely over-extended, having acquired some 200 firms during the 1990s.

Mr Breen has pledged to trim the business back to its more profitable segments.

But the task is a hugely complex one, involving 219 separate manufacturing, sales and distribution facilities, and potentially huge restructuring costs as jobs are cut.

Selling up

The biggest immediate task is the sale of TGN, one of Tyco's most grandiose projects.

The undersea network, which spans 60,000 kilometres and three continents, and which Tyco bills as "one of the most extensive and technologically advanced communications systems ever constructed", has haemorrhaged cash since the slump in hi-tech markets.

It made a pre-tax loss of $117m last year, while Tyco had to write down its value by nearly $1bn.

Tyco sold a small minority stake in TGN via an initial public offering in 2000, but market conditions are far less favourable today.