Shares of Tyco Fall Despite Outlook

Conglomerate Tyco International Ltd. said Tuesday second-quarter earnings would beat analysts’ estimates, but its battered stock fell on lingering concerns about a possible cash crunch.

Debt rating firm Standard & Poor’s said Tyco’s rating could be cut because the spinoff Monday of its CIT Group finance unit failed to raise as much cash as expected.

Tyco shares dropped $1.10 to $12.65 on the New York Stock Exchange.

Tyco executives, in a conference call with investors, bristled at any suggestion the company faces a credit crunch.

“From now until November 2003 ... we can meet all of our obligations without refinancing any debt or selling any assets,” interim Chief Executive John Fort said.

He also said management has found no evidence of accounting irregularities in its review since former CEO L. Dennis Kozlowski resigned last month. Kozlowski has been indicted on sales-tax evasion charges.

“Accounting issues have created a recent firestorm in the corporate world,” Fort said. “We’re not in this category.”

Mark Swartz, Tyco’s chief financial officer, said the company expects to earn at least 44 cents a share in the quarter ended June 30, or a penny better than the consensus forecast.

Swartz said cash flow estimates indicate Tyco can pay down more than $8 billion of debt maturing in fiscal 2003 and finish the year with almost $2 billion in cash.

Investors had hoped Tyco could retire even more debt, but the sale Monday of CIT raised $4.6 billion for the parent firm. Tyco had hoped to raise as much as $5.8 billion.

CIT shares fell $1 to $22 in their trading debut on the NYSE.