TSCM: Tyco
In my November column on Tyco TYC , when the stock was trading at $57.55, I said that "after taking a peek behind the numbers at Tyco, you'll want to run, not walk, away from this stock." It closed Thursday at $28.
I'm puzzled by the aggressive foray into this stock by so-called value investors. And I'm not sure which financial statements Wall Street analysts are reading (or not reading) because some of them are holding fast to projections of Tyco stock at $65 or higher.
With top executives cashing in on stock options without reasonable disclosure, an eight-figure payment to a director for "help" in an acquisition, unreported acquisitions, credit problems, changed business strategy and numerous misleading statements, I can't be confident in the numbers provided by Tyco. I don't trust management, and I don't trust the accounting.
My educated guess is that Tyco is teetering on a precipice. Based on the way I measure cash flow and the debt burden, I think the company is closer to unraveling than people think. |
