Bloomberg News
EXETER, N.H. - Tyco International Ltd. chief executive officer Dennis Kozlowski says his company has not strayed far from its main electronics and fiber-optic cable businesses with its plan to buy the commercial finance outfit CIT Group Inc.
Tyco agreed last month to buy the commercial finance company for $8.4 billion.
Owning CIT, of Livingston, N.J., might help Tyco weather a slowdown in some of its more economy-sensitive businesses, such as electronic connectors used in cellular phones and circuit boards. The company has predicted that selling financing to established customers would boost revenue by as much as $6 billion and add 10 cents a share to profit in the first year after the close of the deal, expected within four months.
Electronics accounted for $9.9 billion of Tyco's $28.9 billion in sales for the fiscal year that ended Sept. 30. The company, which is based in Bermuda but run from Exeter, has forecast 2001 sales of about $38 billion, excluding CIT.
"When we were growing electronics at 40% a year, we never projected to the world we were going to continue that," Mr. Kozlowski said in an interview. "We were happy to do 15% to 20% growth, and that is the range the growth will be on the electronics side."
Brad Galko, an analyst at Morgan Stanley Dean Witter & Co., wrote that the CIT agreement has "fueled recurring fears that management is more interested in building an empire than rewarding shareholders and may have finally gone too far afield." But he added that in the past, "those betting against management have suffered."
Mr. Kozlowski has built the company into the first or second in all its main businesses. "The proof in this is always in the earnings," the CEO said. "We have never, ever disappointed."
Tyco is the biggest maker of electronic connectors, undersea fiber-optic cable, valves used in industries such as oil and gas, and security and fire systems.
