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Non-Tech : Tyco International Limited (TYC) -- Ignore unavailable to you. Want to Upgrade?

To: Bosco who wrote (929)	12/9/1999 4:59:00 PM
From: Y. Samuel Arai	Respond to of 3770

from Dow Jones Newswires: NEW YORK -(Dow Jones)- Shares of Tyco International Ltd. plunged Thursday after the Bermuda-based manufacturing conglomerate said the Securities and Exchange Commission is conducting a "nonpublic, informal inquiry" into charges and reserves taken in connection with Tyco acquisitions. Tyco said it will be providing information and documents about its accounting practices to the SEC staff on a voluntary basis. After a delayed opening on the New York Stock Exchange, shares of Tyco (TYC) closed off $8.375, or 23%, at $27.875 on whopping volume of 114 million. Average daily turnover is about 14.7 million. Earlier, the shares dipped to as low as $22.50, well below the previous 52-week low of $32.063 set Dec. 15, 1998. The stock has been under pressure in the last couple of months, tumbling from its 52-week high of $53.875 set on Oct. 8 since Dallas-based money manager David Tice published a report highly critical of Tyco's accounting, saying its so-called pooling deals created reserves that management used to boost its financials. This year alone, Tyco has done more than $14 billion worth of deals, often employing the pooling method, which merges the two companies' financial statements, requiring all past results to be restated. Tyco officials have strongly supported the company's accounting practices. In a conference call with shareholders and analysts following Tice's report in early October, Chairman and Chief Executive L. Dennis Kozlowski blasted the report as wrong, saying the company has "never ever been accused of any wrongdoing with auditors or SEC." Kozlowski also insisted "there's no risk investors will wake up and find something wrong" and said the company's conservative accounting practices conformed with SEC rules. Hamilton, Bermuda-based Tyco said it remains confident of its accounting methodology, public disclosures and the strength of its business. The company plans to file its Form 10-K financial report for fiscal 1999 on Dec. 13. In response to the controversy, however, Tyco announced in early November it would change its acquisition strategy and would no longer consider the kind of all-stock deals that have been at the center of investor concern about its accounting practices. At the time, Kozlowski told the Wall Street Journal, "it's not worth doing" all-stock deals that use so-called pooling accounting, given the company's current depressed share price and the general controversy about pooling transactions, which have been under fire from regulators and may be banned next year. The acquisitive conglomerate instead will pay for purchases mostly with cash, the Tyco chief said, and may supplement its war chest by selling a couple of smaller units for between $1 billion and $1.4 billion. The strategy shift means Tyco is less likely to do the kind of megadeals that have been its hallmark in recent years, including the $11.9 billion purchase of electronic-parts maker AMP Inc. earlier this year. Tyco makes a wide range of products, including electronic components, fire-control systems and fiber-optic cable, but has nothing to do with Tyco toys. Criticism of Tyco's accounting has centered on one-time writeoffs and other moves by companies it was about to acquire that helped make Tyco's growth rate appear more robust than it actually was. One analyst, John Inch of Bear Stearns & Co., said the SEC inquiry is good news. "This will resolve the full accounting issue once and for all," said Inch, who added there isn't any reason to believe Tyco has engaged in any accounting irregularities. This has created a "tremendous buying opportunity," declared Harriet Baldwin of Deutsche Bank. Inch and Baldwin both said Tyco's fundamentals remain strong. "This has no impact on their fundamental ability to meet my earnings outlook," said Baldwin, who expects the company to earn $2.23 a share for calendar 2000. Copyright (c) 1999 Dow Jones & Company, Inc. All Rights Reserved.