Tyco Cuts Profit Forecast for the Quarter

New management of conglomerate Tyco International Ltd. on Wednesday sharply cut the company’s earnings estimate for this quarter but said the move is unrelated to alleged financial abuses by the previous management team.

Operating profit in the fourth quarter ending this month will be 30 cents to 33 cents a share, new Chief Executive Edward Breen told investors on a conference call. Previous management had forecast 45 cents to 47 cents.

Breen said Tyco also will incur costs of as much as $2.5 billion in the quarter to consolidate its fiber-optic cable business.

The forecast is the first Breen has given since taking over in July amid charges that former CEO L. Dennis Kozlowski and other executives looted the company.

Breen on Wednesday tried to reassure investors that liquidity is stable and debt is manageable, and he said an internal accounting review isn’t showing evidence of inaccuracies or fraud. Tyco’s problems are fundamental, he said: Sales are still slow at the Tycom undersea cable business and at Tyco’s electronics unit.

But sales overall this quarter will match the $9.1 billion of the previous quarter, Breen said.

Investors responded positively to his comments, pushing the stock up $1.41 to $15 on the New York Stock Exchange. The price has plunged 75% this year.

Still, Wall Street probably will remain concerned about the company’s future until the accounting review is complete, analysts said.

Separately, New Hampshire regulators Wednesday sent a letter to Breen insisting that the nine board members who served under Kozlowski resign immediately. “It is disingenuous to believe that the same board that breached its fiduciary duties in exercising oversight responsibility over certain wayward employees is the best arbiter of appropriate corporate governance,” wrote Mark Connolly, the state’s director of securities regulation.