Through TheFLY's Eyes: Tyco International Ltd.
from Theflyonthewall.com









The Turnaround Is Underway

Tyco (TYC) is finally on the right operational track. Ed Breen who was able to quickly turn around the financial health of Tyco has taken a bit longer turning the operating performance around. However, with today’s results, the company is now on its way.

Tyco’s stock was weak pre-market due to lower guidance, but this was mostly associated with higher copper prices (see earlier theflyonthewall bog on copper prices). Tyco’s electronics business consumes 50 million pounds of copper which increased $1.00 per pound during the last quarter. Total cumulative impact of higher copper prices for the June quarter will be $100 million. Outside of higher commodity prices, cost controls are all in place.

Management for all business segments were the most confident since Breen took the helm from Kozlowski. The company showed the best organic growth in quite some time which has been a big concern for investors. The company announced a new $2.0 billion stock buyback and is comfortable with the current debt level of $10 billion which management said will stay flat, with excess cash going to share buybacks.

The Tyco cash flow machine is back with organic revenue growth now in place. Institutional investors will have to plow back into this one.