More confirmation: Tyco REQUESTED SEC inquiry.
<<Tyco Plunges on News of SEC Inquiry
TheStreet.com/NYTimes.com
12/9/99 7:03 PM ET
Tyco International (TYC:NYSE) disclosed Thursday that the U.S. Securities and Exchange Commission was conducting a "nonpublic, informal inquiry" regarding charges and restructuring procedures regarding all the acquisitions the company has made over the last six years.
That amounted to more than 120 companies valued at $30 billion, according to Brad McGee, a senior vice president at Tyco. Tyco's shares plunged on the news, dropping 13, or 37%, to 23 1/4 after the stock market opened, before partially pulling back to settle down 8 3/8, or 23%, at 27 7/8. The drop came in very heavy turnover of 115 million shares, 11 times the company's daily trading average.
The SEC declined to discuss the nature of the probe. Tyco said it was pleased about the inquiry, which it hoped would answer questions regarding its accounting procedures that have recently sent the company's shares on a steep descent.
"In light of the recent market activity in our stock, which is not justified by any development at the company, we welcome the opportunity to respond to this request," Tyco chief executive Dennis Kozlowski said in a statement.
"We remain confident of our accounting methodology, our public disclosures and the continuing strength of our business," he added. McGee said the Hamilton, Bermuda-based company had asked the SEC to conduct the probe following several damaging reports earlier this year that accused the company of improper accounting procedures.
"We did ask the SEC to investigate... We thought that the accusations had no merit," said McGee, adding that Tyco would cooperate with the SEC to clear its name.
In mid-October David Tice, a Dallas, Texas-based fund manager who held short positions in Tyco, suggested that the company had reserved cash when it acquired companies and then used the money to puff up earnings.
That and subsequent media reports sent Tyco's shares into a tailspin. The company's shares have shed nearly 50% since reaching a 52-week, post-split high of 53 in mid-October.
Some analysts said they were thrown by the announcement. "The SEC has reviewed this company extensively and has cleared them," said Edward Wheeler, an analyst at Buckingham Research Group. "It's surprising that there is an (outstanding) issue." Wheeler rates Tyco a buy and has not done any underwriting for the company, a leading manufacturer of electronic and consumer products.
Prior to Tice's suggestions, the Center for Financial Research and Analysis warned clients about the accounting procedures Tyco employed when it bought AMP and United States Surgical. McGee said the SEC had already fully reviewed those acquisitions.
Bill Painter, a senior equities trader at Federated Investors, said he thought the company's disclosure of the SEC inquiry demonstrated that Tyco was aggressively seeking a way to clear its name. "It almost seems like what they are trying to do is open their doors and say, 'Come take a look'," Painter said.
If the SEC clears the company of the charges, Painter said Tyco, a company that has been a high flyer over the past five years, would be poised for a strong rally. "If they come out clear the stock is going to rally big," Painter said. Federated owns about 3 million shares of Tyco, or about 0.2%.>>
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IMO, when this gets more fully publicized, well, it paints a different picture than today's.
Best wishes,
Tom |
