Tyco CEO: Making Progress With Some Planned Divestitures
By BETH DEMAIN REIGBER
Of DOW JONES NEWSWIRES
NEW YORK -- Tyco International Ltd. (TYC) is making progress with plans to sell some assets, including its Tyco Global Network undersea fiber optic telecommunications network, Chief Executive Ed Breen said.
The company's financial health is also improving faster than many observers likely expected, he told a small group of reporters following an investor meeting.
While debt reduction still has top priority this year, next year the company is likely to have more financial flexibility, allowing it to consider options such as acquisitions and an increased dividend, he said.
On the divestitures, CEO Breen said the sales are still in an early stage, especially with telecommunication unit TGN, which is valued on Tyco's books at close to zero after a big write-down.
However, he said, "We have a fair amount of interested parties we're talking with."
There are also six or seven other businesses that are sale candidates "taking up more of our attention," Breen said, as they account for a relatively high share of revenue.
He said he hopes to see progress with these next quarter.
The Bermuda conglomerate, run out of U.S. offices, last month unveiled a sweeping restructuring, including plans to sell TGN and 50 other businesses that had combined revenue of $2.1 billion in the fiscal year ended Sept. 30.
Breen declined to say which other businesses are on the block.
Another area Tyco has been working at is improving its financial situation, after liquidity concerns scared investors last year. Tyco has focused on pumping out cash, restructuring and paying down debt.
Contrary to last year's worries, Breen said Tyco's liquidity "has now become a great bright spot."
Chief Financial Officer David FitzPatrick said the company won't likely add to its dividend or launch a share repurchase until it has "solid investment-grade credit ratings."
Giving an update on litigation Tyco is embroiled in as part the legacy of former CEO L. Dennis Kozlowski's regime, Breen said the timing is unpredictable. But there could be resolution in a year or two, he said.
Looking at the big picture, CEO Breen again stressed that he and management are now dedicated to improving Tyco's operations, after spending most of last year - when Breen joined Tyco following the ouster of ex-CEO Kozlowski - dealing with the company's past.
"That stage of our history is...done with," he said.
Besides pushing new products to build sales, Tyco is working to consolidate sales efforts, factories and real estate; improve working capital and cut costs through efficient sourcing.
Like countless other manufacturers, Tyco also talked up efforts to move production from high-cost areas such as the U.S., western Europe and Japan to lower-cost regions, specifically China.
Some of these efforts, started early this year, are starting to show results, Breen said. |
