Successfullness of Tyco
Case Discussion 3.3
Successfulness of Tyco (Yahoo! Finance)
Previously, Tyco International was a well diversified entity that received tremendous financial criticisms with regards to accounting tricks which negatively affect its stock price that hamper the company’s financial performance. Therefore, the company took several corrective actions to generate cash flow, splitting up the company into four independent units and selling off plastics and financial service units besides planning to sell off some of its acquired businesses to cover short-term debt commitments. In order to enlighten the company’s image and reputation which are dampen among investor’s perception and judgment, Tyco completed a spinoff of CIT group to service its debt commitments.
The following table summarizes the series of material transactions and dealings done by Tyco International in the recent decade. Financial result is used as the benchmark to measure the performance of Tyco’s corporate strategy actions.
Tyco International Milestone Year 2002 to 2012 Year | Actions | Result | 2002 | * Acquired Communications Instruments (Electrical), Inc Paragon Trade Brands (Health), Clean Air Systems (Engineering Product) and SBC/Smith Alarm Systems, DSC Group, and Sensormatic Electronics Corp (Fire and Security) * divested Tyco Capital business | * Loss on charge over fiber optic network, restructuring cost, goodwill impairment, investment loss * net charges totaled nearly $7 billion of the loss * Stock Price plummeted by 70% | 2003 | * consolidated class-action federal suit brought on behalf of retirees in its Retirement Savings and Investment Plans * forming its Plastics & Adhesives business segment * corporate governance : strengthened control over cash disbursements | * stock price increased by 60% * profit increased | 2004 | * divested 21 businesses and liquidated four non-core businesses, primarily within the Fire and Security segment | *
Successfulness of Tyco (Yahoo! Finance)
Previously, Tyco International was a well diversified entity that received tremendous financial criticisms with regards to accounting tricks which negatively affect its stock price that hamper the company’s financial performance. Therefore, the company took several corrective actions to generate cash flow, splitting up the company into four independent units and selling off plastics and financial service units besides planning to sell off some of its acquired businesses to cover short-term debt commitments. In order to enlighten the company’s image and reputation which are dampen among investor’s perception and judgment, Tyco completed a spinoff of CIT group to service its debt commitments.
The following table summarizes the series of material transactions and dealings done by Tyco International in the recent decade. Financial result is used as the benchmark to measure the performance of Tyco’s corporate strategy actions.
Tyco International Milestone Year 2002 to 2012 Year | Actions | Result | 2002 | * Acquired Communications Instruments (Electrical), Inc Paragon Trade Brands (Health), Clean Air Systems (Engineering Product) and SBC/Smith Alarm Systems, DSC Group, and Sensormatic Electronics Corp (Fire and Security) * divested Tyco Capital business | * Loss on charge over fiber optic network, restructuring cost, goodwill impairment, investment loss * net charges totaled nearly $7 billion of the loss * Stock Price plummeted by 70% | 2003 | * consolidated class-action federal suit brought on behalf of retirees in its Retirement Savings and Investment Plans * forming its Plastics & Adhesives business segment * corporate governance : strengthened control over cash disbursements | * stock price increased by 60% * profit increased | 2004 | * divested 21 businesses and liquidated four non-core businesses, primarily within the Fire and Security segment | *