Tyco profit drops on higher costs, but beats forecast

Industrial manufacturing conglomerate Tyco International Ltd., which is planning on splitting into three separate, publicly traded companies, said today its second-quarter earnings slipped 7 percent as higher costs offset revenue growth.

Net income declined to $835 million, or 41 cents per share, from $895 million, or 43 cents per share, a year ago.

Profit from continuing operations totaled 49 cents per share in the latest quarter, excluding 7 cents of separation and restructuring costs. The company said earnings were hurt by higher material costs - primarily copper - and modestly higher investment in engineering and selling.

Revenue grew 7 percent to $10.84 billion from $10.09 billion last year, as better-than-expected growth in the company's electronics and engineered products businesses helped offset sales declines in computer and communication service provider markets.

On average, analysts surveyed by Thomson Financial were looking for adjusted profit of 47 cents per share on revenue of $10.77 billion.

Tyco said growth was strong in Europe and Asia, but revenue declined modestly in North America, with the exception of strong growth in its undersea telecommunications business.

Bermuda-based Tyco is splitting into Tyco Healthcare, which will be renamed Covidien; Tyco Electronics, to be based in Tredyffrin, Chester County; and Tyco International, which will include the company's fire security and engineered products unit.

The company previously expected the split to occur early in the second quarter, but analysts said a late-June split is now likely, due to a complex regulatory process.

The stock fell 9 cents, or 0.3 percent, to $32.72 in early morning trading.