US conglomerate Tyco International - which is in the process of splitting into three companies - yesterday reported lower quarterly profit as three of its four divisions reported lower results.
The company cited high raw material prices, product recalls in its health care division, and costs tied to the replacement of fire safety products. It said current-quarter results would miss analysts' forecasts, and its shares fell slightly in trading before the market opened.
Net income fell to $868 million (£464.1 million) in the third quarter ended on June 30, from $1.19 billion (£636.3 million) a year earlier.
Tyco, whose products range from surgical instruments and home security products to water treatment systems and fiber optic cable, said sales rose five per cent to $10.5 billion (£5.61 billion), matching Wall Street forecasts.
The Bermuda-based company also said it was on track to finish its breakup by the end of March. It announced a smaller sale earlier on Thursday, saying it would divest its printed circuit group to TTM Technologies for $226 million (£120.8 million).
Each of Tyco's four divisions reported higher quarterly revenue, but only one - Fire and Security - had higher operating income and margins. Income and margins were down in Tyco's electronics, health care, and engineered products and services segments.
"I'm a little disappointed there wasn't a better turnaround at health care, which has really been an area of opportunity for them as one of the few growth areas," said money manager John Boland of Maple Capital Management. The firm owns 70,000 Tyco shares, having cut its stake by a third since last year.
But Mr Boland said the company's cash flow remained strong and the company seemed committed to reducing its share count.
"They're pretty aggressive about buying back stock, which we had feared given the break-up they wouldn't be," he said.
The company said it had spent $1.1 billion during the quarter and another $134 million in July on share repurchases. It has bought back 76 million shares so far this year.
Chief Executive Ed Breen has been trying to revive growth and refocus a company that rapidly expanded into new markets under predecessor Dennis Kozlowski.
Kozlowski and former chief financial officer Mark Swartz were found guilty of looting $600 million from Tyco and are serving prison sentences of up to 25 years.
