Tyco Int'l beats estimates but "organic" sales weak

NEW YORK (Reuters) - Tyco International Ltd (TYC.N: Quote, Profile, Research) reported higher-than-expected quarterly earnings from continuing operations on Thursday, but its shares fell 3.5 percent on concerns about the pace of sales growth, especially in Tyco's flow control segment.

Investors are disappointed the segment, which makes valves and temperature controls, only posted 7 percent "organic" sales growth, down from a double-digit pace in earlier quarters, said analyst Peter Bates of T. Rowe Price.

"Core growth decelerated in the (flow control) segment," said Bates, whose firm owns about 12.8 million Tyco shares in several funds. "That disappointed people."

Tyco's overall "organic" sales growth was 3.6 percent in the quarter, below the 4 percent to 5 percent range the company forecast in February and below some analysts' estimates.

Tyco reported income from continuing operations before special charges of $326 million, or 67 cents a share, in the second quarter that ended March 28, almost double the year- earlier $167 million, or 33 cents per share.

Analysts on average were expecting 58 cents per share, according to Reuters Estimates.

JP Morgan analyst Stephen Tusa said a favorable tax rate supported results, but called them "a solid beat" and said a strong order backlog suggests profits may accelerate in the second half of Tyco's fiscal year.

Tyco said revenue rose 8 percent to $4.87 billion, compared with Wall Street forecasts of $4.98 billion.

Sales rose 4 percent at Tyco's ADT security division, its biggest, as strength in Asia and Latin America offset weakness in Europe and North America. Operating earnings rose 14 percent.