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Strategies & Market Trends : Technical analysis for shorts & longs
SPY 681.76-1.1%Dec 12 4:00 PM EST
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To: j g cordes who wrote (36073)2/4/2002 11:37:09 AM
From: Johnny Canuck   of 69035
 
2. INVESTORS LOSING FAITH IN TYCO

Shares of conglomerate Tyco International sank to a fresh
two-year lows this week as investor disappointment with
the company’s breakup plan was exacerbated by revelations
that it paid an outside director $20 million to help broker
last year’s $9.5 billion acquisition of CIT Financial. The
company, now called Tyco Financial, is slated to be the
first unit spun off in the company’s breakup plan, which
Tyco’s management revealed in a surprise announcement last
week. Tyco’s share slide has also been fueled by news that
the breakup has prompted medical device maker C.R. Bard to
reassess its $2.6 billion acquisition by Tyco.

TODD’S TAKE: As this story develops, Tyco’s breakup plan is looking worse and worse. The firm’s stated purpose is to unlock value in its stock, reduce its structural complexity and reduce debt. But the line about
“unlocking value” seems like a pretty quick about-face,
especially when you consider that we’re still in a down
market and Tyco is still making acquisitions.

Investors are suspicious, and as such they’re looking closely at Tyco’s books. And with the Enron and Kmart
debacles fresh in everyone’s mind, this is a bad time to have analysts find highly questionable payments to
board members. If the heightened attention on Tyco leads to the discovery of any accounting irregularities, then this situation could grow much worse. We recommend staying well away from Tyco for the time being.
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