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Thursday, 25 April, 2002, 13:33 GMT 14:33 UK
Tyco abandons four-way split
Tyco's chairman and chief executive Dennis Kozlowski's letter to shareholders
Mr Kozlowski's letter to shareholders
US industrial conglomerate Tyco has reported its first ever net loss, announced massive job cuts, and abandoned a plan to split into four separate companies.

The group - with interests ranging from electronics to plastics - had in January responded to investor concerns over the transparency of its accounts by promising that it would arry out a four-way split.

Tyco's chairman and chief executive Dennis Kozlowski said on Thursday that this strategy was "a mistake".

Tyco also reported a $1.9bn (1.31bn) loss for the January to March quarter, down sharply from a $1.1bn profit a year earlier.

The firm added that it would shed 7,100 jobs and close 24 of its factories.

The announcement pushed Tyco's already battered shares to close 5.15% lower at $20.75.

Tyco stock has fallen 62% so far this year.

Mistake

Early this year, Tyco's decision to divide the conglomerate into separate publicly traded company met with widespread approval.

The aim was to make it easier for investors to understand the ins and outs of the sprawling conglomerate.

The perceived logic at the time - when investors spooked by the Enron scandal tended to punish lack of transparency - was that the total value of Tyco's parts would be realised when separated.

"But we now know it was a mistake," Tyco's chairman and chief executive Dennis Kozlowski said in a letter to shareholders.

Clarifying deal

The four-way split strategy has now been replaced by an alternative.

The latest strategy involves spinning off Tyco's finance arm CIT for up to $7bn.

"As we reviewed our strategy, we concluded that the sale of CIT would reduce our vulnerability to the debt markets and make the company less complex," Mr Kozlowski said.

See also:

25 Feb 02 | Business
Tyco triumphs over investor lawsuits
13 Feb 02 | Business
Accounting fears hit telecom shares
11 Feb 02 | Business
Echoes of Enron in telecoms collapse
08 Feb 02 | Business
Markets suffer from 'Enronitis'
06 Feb 02 | Business
Tyco soothes investor jitters
14 Feb 02 | Business
Concerns mount over Tyco
19 Feb 02 | Business
Tyco's investor pep-talk
08 Feb 02 | Business
Tyco admits mistakes
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