Engineered electronic components manufacturer Tyco Electronics Ltd. (TEL) reported Wednesday that profit for the fourth quarter plunged 54% from last year, hurt by a 25% drop in quarterly revenues as well as lower margins. All of the company's business units also reported double digit sales drop. The company also provided earnings sales forecast for the first quarter of fiscal 2010. In a statement, chief executive officer, Tom Lynch said, "Our fourth quarter was a strong finish to a challenging year. Sales increased 8 percent sequentially due to continued improvement in our automotive and consumer-related businesses which grew 17 percent. This more than offset the expected slowdown in our Undersea Telecommunications segment. The aggressive cost actions we initiated in response to the downturn, coupled with the sales increase, improved our adjusted operating margins from 5 to 8 percent sequentially."
Fourth Quarter Results
The Schaffhausen, Switzerland-based company posted net income of $93 million or $0.20 per share for the fourth quarter, sharply lower than $202 million or $0.43 per share in the prior-year quarter.
Income from continuing operations declined to $83 million or $0.18 per share from $88 million or $0.19 per share in the year-ago quarter.
The results for the latest quarter include $0.08 per share of net restructuring and other charges, $0.09 per share of income tax related charges, and $0.04 per share of income related to a gain from the early retirement of debt. The prior-year quarter results included $0.46 per share of charges.
Excluding one-time items, adjusted income from continuing operations dropped to $140 million or $0.30 per share from $308 million or $0.65 per share in the comparable quarter a year ago. The company said back in July that it expects GAAP earnings from continuing operations for the fourth quarter in a range of $0.15 to $0.22 per share, including restructuring and other charges of about $0.11 per share and about $0.04 per share related to a net gain on early retirement of debt. Adjusted earnings from continuing operations were expected by the company in a range of $0.22 to $0.29 per share.
Net sales for the quarter dropped 25% to $2.70 billion from $3.58 billion in the same quarter last year. Nine Wall Street analysts had a consensus revenue estimate of $2.46 billion for the fourth quarter.
Peer Performance
Among Tyco's peers, Wallingford, Connecticut-based Amphenol Corp. (APH) reported last month a 28% year-over-year drop in profit for the third quarter, reflecting lower sales on weak demand created by the economic downturn as well as currency translation impact. Net income was $80.92 million or $0.47 per share, down from $112.96 million or $0.63 per share last year. Quarterly net sales declined 17% to $716.57 million from $863.66 million a year ago.
Another peer, Lisle, Illinois-based Molex, Inc. (MOLX) reported Tuesday a loss of $11.60 million or $0.07 per share for the first quarter as higher restructuring charges and lower revenue reversed its year-ago profit. However on a non-GAAP basis, the company reported first-quarter net income that dropped 47% from last year to $31.75 million or $0.18 per share from $59.96 million or $0.34 per share. Quarterly net revenues declined to $674.03 million from $838.99 million last year.
Segmental Details
Sales for electronic components, which is one of the world's largest suppliers of passive electronic components, dropped 28% to $1.63 billion from the year-ago quarter. Sales declined 24% organically. Operating income rose 31%, and operating margin grew 100 basis points to 2.3%, while adjusted operating income slipped 79%, and adjusted operating margin also plunged 900 basis points to 3.8%.
One of the world's largest suppliers of infrastructure components and systems, network solutions reported a sales decline of 22% from the prior-year quarter to $436 million. Sales declined 18% organically. Operating income dropped 43%, and operating margin declined 310 basis points to 8.5%, while adjusted operating income declined 26%, and adjusted operating margin edged down 60 basis points to 11.7%.
Undersea telecommunications, which is a solutions provider to the world's most advanced fiber optic undersea networks, posted sales of $268 million, 11% lower than last year. Sales also declined 11% organically. Operating income rose 42%, and operating margin increased 750 basis points to 20.1%, while adjusted operating income surged 46%, and adjusted operating margin grew 840 basis points to 21.3%.
Sales for specialty products, a leader in providing highly-engineered custom solutions, components and connectors, decreased 21% to $362 million from the same quarter last year. Sales declined 22% organically. Operating income decreased 28%, and operating margin edged down 80 basis points 13.0%, while adjusted operating income declined 33%, and adjusted operating margin decreased 250 basis points 14.1%.
Other Metrics
Total company orders decreased 8% year-over-year,, with the book-to-bill ratio of 1.07 in the quarter. Excluding the company's undersea telecommunications segment, which is a project-oriented business with uneven order patterns, orders declined 17% year-over-year, with the book-to-bill ratio of 1.05.
Operating income for the fourth quarter was $176 million, 14% lower than the prior-year quarter, while adjusted operating income plunged 53% year-over-year to $221 million. Operating margin grew 80 basis points to 6.5%, while adjusted operating margin dropped 500 basis points to 8.2%.
Gross income for the quarter rose to $691 million from $1.01 billion in the comparable quarter a year ago. Restructuring and other charges were $46 million, sharply lower than $157 million in the year-ago quarter. The recent quarter included an impairment of goodwill of $103 million.
The company ended the fourth quarter with cash and cash equivalents of $1.52 billion, compared to $1.09 billion in the prior-year quarter.
Full-Year 2009 Highlights
For fiscal 2009, Tyco Electronics posted a net loss of $3.26 billion or $7.09 per share, compared to net income of $1.78 billion or $3.67 per share in fiscal 2008. Loss from continuing operations was $3.10 billion or $6.75 per share, compared to income of $1.53 billion or $3.14 per share last year.
Adjusted income from continuing operations plunged to $380 million or $0.83 per share from $1.23 billion or $2.54 per share in the comparable period a year earlier. Analysts expected the company to report earnings of $0.79 per share for the full-year 2009.
Net sales for the twelve-month period declined to $10.26 billion from $14.37 billion in the same period last year. The Street was looking for revenues of 10.16 billion for fiscal 2009.
Looking Ahead.......
"In the first quarter, we expect our sales to be flat to up slightly due to continued strengthening in our Electronic Components segment, partially offset by the continued slowdown in our Undersea Telecommunications business. We expect another quarter of solid operating margin improvement." Lynch added.
Looking ahead for the first quarter of fiscal 2010, Tyco Electronics anticipates earnings from continuing operations in a range of $0.25 to $0.29 per share, which includes restructuring costs of $0.10 per share. Adjusted earnings from continuing operations are expected between $0.35 and $0.39 per share, assuming current foreign exchange rates.
The company also expects full year sales in a range of $2.7 billion to $2.8 billion. Analysts expect the company to report revenues of $2.51 billion for the first quarter.
Stock Quote
TEL closed Tuesday's regular trading session at $21.71, up $0.35 on a volume of 1.97 million shares, lower than the three-month average volume of 2.53 million shares. In the past 52-week period, the stock has been trading in a broad range of $7.40 to $24.39.
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June 05, 2026 16:18 ET A busy week for economic news flow saw a slew of reports being released that reflected the trends in the U.S. labor market. In Europe, economic growth and inflation data gained attention as the European Central Bank and Bank of England head for policy session later in the month. In Asia, the monetary policy session of the Indian central bank was in focus as the country, a major oil importer, reels under the pressures of a weaker rupee and rising inflation.