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Non-Tech : Tyco International Limited (TYC)
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To: hdl who wrote (3675)11/15/2004 11:21:16 PM
From: rich evans  Read Replies (1) of 3770
 
Tyco stock is at last starting to reflect the great results of Q4.
Tyco reported 1.4 bill in free cash flow. Actually is was 2.2 bill. Tyco paid 400 bill about in AR financing debt which they put in the operating cashflow. And they paid 400 mill in VOLUNTARY pension contributions , thus lowering their "other liabilities" on the balance sheet. This also was part of the operating cash flow and not part of the financng portion of cash flow. Thus there free cash flow thought of as non-discretionary items was 2.2 bill and their operating cashflow wss also 2.2 bill.

Tyco will exceed its lowball estimates in 2004 easily with this kind of cash flow.

Earnings will also excee $2.00/share in my opinion. The reason is that tycos operating margins are now approaching 16% if you take away the TGN losses, resturcture expenses, intangible writeoffs, and divesture expenses. Most of these expenses have been accrued already in 2004 and thus will not show up in 2005 earnings. But tyco will continue to get the 285 mill in savings from these programs plus the 300 mill in 6sigma lean manufacturing savings and the 300 mill in strategic sourcing saving plus working capital improvement in inventory turns, cash recycle etc.

All in all this stock should hit $40 easily in 2005 with this kind of cashflow and earnings.
Rich
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