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Tyco Electronics Profit Tops Forecast

Tyco Electronics, which makes connectors and other components for cars, airplanes and industrial uses, reported a higher-than-expected quarterly profit, but gave a forecast that disappointed some analysts.

Tyco
Tyco

The company posted net earnings of $330 million, or 68 cents per share, for the third quarter ended on June 27, compared with a year-earlier loss of $1.37 billion, or $2.75 per share, that included big charges.

Excluding litigation and restructuring charges, earnings in the latest quarter were 70 cents per share, 3 cents above Wall Street estimates.

Sales rose 19 percent to $3.9 billion, also ahead of forecasts.

Tyco Electronics' biggest division, which makes connectors and switches, posted a 15 percent sales increase as operating profit rose 33 percent. It cited strong demand from the industrial and communications sectors, as well as productivity improvements.

But other markets are slowing, the company said.

"Over the past two months, we've seen order rates soften a bit, particularly in consumer-related segments, including automotive," Chief Executive Tom Lynch told analysts on a conference call.

The auto sector accounts for about 30 percent of the company's total sales.

Tyco Electronics will provide 2009 forecasts next quarter, Lynch said.

The network solutions segment posted lower profits despite higher sales, while earnings more than doubled at two smaller divisions — undersea communications and wireless systems.

The company, spun off last year from Tyco International, narrowed its fiscal-year profit forecast to a range of $2.63 to $2.65 per share, vs. its earlier estimate of $2.60 to $2.66. Analysts were expecting $2.66 per share.

"Given the much stronger June results, this is a bit disappointing," Citigroup Global Markets analyst Jim Suva said in a research note.

Tyco Electronics said sales should be up 14 percent to 16 percent for the year, with at least half that growth coming from existing businesses.

Separately, the company said its board had approved a $750 million increase in its stock buyback program, to $2 billion.