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

To: hdl who wrote (3677)	11/20/2004 12:44:36 PM
From: rich evans	Read Replies (1) \| Respond to of 3770

Tycos margins are improving. Yes Tyco made two big mistakes which cost a bundle. One as you said was the CIT deal. They bought it for 9 bill and sold it a year later for 4.4 bill. The second big mistake was to build TGN for 3.5 bill and they recently sold it for 170 mill. Altogether they lost 8 bill dollars with those two deals. But this was all on Koz's watch. Koz also bought some good businesses and they are performing well with increased margins. Q3 June Q, tyco had a gross margin of 15.2%. At first glance it looks like tyco's gross margins declined in Q4 sept to 14.8%. But this is misleading in my opinion. Tyco had 144 mill in corporated expenses which are not all part of SGA expenses since tyco has put operating groups (tgn) into its corporate segment. In Q3 tycos cororate loss was 87 mill versus 144 mill in Q4. The SGA expense was the same for both quarters. So about 60 mill in costs which will not be ongoing were added to the costs to lower gross margin. Adding this back to gross profits, you get a gross margin increase to 15.34%. Q1 should continue in gross margin improvements as well as the 2005 fiscal year. CEO Breen says tyco is on track with their gross margin and operating margins improvements they have outlined in several investor conferences. If they stay on track this company will be earning $2+/share in 2005 and $2.50/share thereabouts in 2006. Stay on board for a nice scenic ride on the tyco train. Rich