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Wednesday, 6 February, 2002, 22:12 GMT
Tyco soothes investor jitters
Graph of Tyco's plunging share price
Shares in the electronics to plastics conglomerate Tyco International have regained some of the ground lost in recent days after the company moved to reassure investors that its finances are fundamentally sound.

The company's shares jumped closed 12% higher at $25.92 on Wednesday after chief executive Dennis Kozlowski told analysts that none of Tyco's debt is linked to its stock price, and announced reduced costs and rising cash flow levels.

Tyco International
Headquarter: Bermuda
Staff: 202,000 (2000)
Turnover: $34bn (2001)
Profits: $3.97bn (2001)
Market value: $58bn (29 Jan 02)
52-week share high: $63.21
Wednesday's low: $28.60
The increase in the share price came despite a warning that Tyco's profits are likely to come in below forecasts due to an uncertain sales outlook in its electronics division and higher debt servicing costs.

Tyco's stock price has fallen steeply in recent days amid concerns that its highly complex structure may be masking its true financial position.

Countering the 'Enron effect'

Analysts said confidence in Tyco has been dented in part by the unfolding Enron scandal, which has heightened investor sensitivity to the transparency of corporate finances.

Tyco's shares are still worth less than half their value at the beginning of the year, when they sold for nearly $60.

Mr Kozlowski said Wednesday's was the first of a series of weekly talks with investors and analysts aimed at keeping them up to date with the latest company developments.

Tyco's activities
electrical and electronic parts
undersea telecoms systems
fire protection systems
burglar alarms
specialty valves
disposable medical products
financial services
plastics
adhesives

He dubbed this a strategy of "over communication."

Tyco has grown rapidly through acquisition, snapping up more than 200 firms in 10 years, and creating a highly complex conglomerate in the process.

The company is active in 100 countries, and makes everything from burglar alarms to plastic hangers. It is among the world leaders for electrical components, undersea telecoms systems and specialty valves.

Pastics spin-off

Expanding Tyco into many different industries was intended to produce a "recession proof" conglomerate, but the acquisition spree caused a build-up of debts and led to expensive good will write-downs.

And analysts and investors alike have found it difficult to discern how much of Tyco's profits comes from real growth, and how much results from its buying spree.

Two weeks ago, the company unveiled plans to selll its plastics business, and split the remainder into four separate listed companies, focusing on security and electronics, health care, fire protection and flow control, and financial services.

Tyco stessed on Wednesday that it is not facing a cash crunch, saying that it expects to have an extra $1.5bn dollars within a year, excluding any money raised from the sale or flotation of subsidiaries.

See also:

29 Jan 02 | Business
Enron scandal at a glance
25 Jan 02 | Business
Enron auditors quizzed
25 Jan 02 | Business
Kmart starts internal investigation
30 Jan 02 | Business
Share prices continue slide
14 Jan 02 | Business
Audit giants called to account
30 Jan 02 | Business
Tyco hit by 'Enron ripple'
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