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Non-Tech : Tyco International Limited (TYC)
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To: JDN who wrote (3724)11/16/2006 10:19:17 PM
From: rich evans   of 3770
 
Tyco estimates of Q1 are conservative and 2cents a share low.Tyco did 51cents a share in Q4 . Tyco always gives low guidance these days so as not to dissapoint like it did in 2005. Margins for tyco will stay the same in Q1.

In electronics copper prices used were 3.70/lb in Q4. In Q1 copper will be 3.10lb. 50mill lbs equals a saving of 30million dollars to bottom line. Electronics revenue growth will be 7% per CC in Q1 year to year but less then Q4.But margins will improve as material costs coming down.

Same with the health division. 15% of revs is imaging and respirtory. This equals about 375mill of sales a Quarter. The 7% decline hurts revs by 1% . Organic growth will overcome so Health earnings should be same despite margin decine to 22% from increased sales/marketing and R&D.

Outlook for F/S is also for good revenue and profit year to year. Margins in F/S almost up to target of 12%. Safety products should rebound and although it is only 10% of sales the margin is 18%.

Engineering should also be OK. Steel prices are up, spreads are down but this is only about 20-30mill deal. Flow which is 50% of business is going gangbusters and at 17% margins. So growth should overcome steel spread problem.

Conclusion. Using about a 5-6% organic growth year to year and holding margins in the 14.2 to 14.5% range , tyco will do at least 46cents a share in Q1.

Before earnings though we will get the prospectuses on the separate companies, the NeW York meeting and conference and the Roadshow will start. All in all a bullish scenario.
Rich
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