This story was written by Keith Dawson for the Media Unspun email newsletter and is Copyright 2002 by Keith Dawson.
M E D I A   U N S P U N
Tyco, 10-Foot Poles, and Cockroaches

The Bermuda-based conglomerate Tyco yesterday abandoned its announced plan to split itself into four pieces. The market's reaction to the breakup plan, announced in January, had been withering. And how did the market react to Tyco's about-face? Redoubled withering. The stock was the NYSE's most active yesterday, many outlets reported, and lost 20 percent of its value overnight. The New York Times filled in the history, reporting that Tyco's 65 percent drop this year cost shareholders $76 billion, "almost as much as was lost in the collapse of Enron." In an understatement, the Wall Street Journal characterized the move as "humbling" in its lead paragraph, but got more negative as its coverage progressed.

Tyco is not exactly a household brand, though the company's many divisions make "everything from diapers to burglar alarms" as Reuters informed us. The Boston Globe characterized Tyco as "a far-flung conglomerate with operations in dozens of largely anonymous businesses."

The earlier breakup plan had represented a 180 from Tyco's acquisition binge in the late '90s. The Globe's Jeffrey Krasner, who turned in a sharply worded piece, called CEO Dennis Kozlowski's move in abandoning the plan "the second about-face." Krasner quoted analysts on the blow it delivered to Kozlowski's none-too-solid credibility. For example, here's a New York M&A specialist: "Tyco's credibility was suspect at best three months ago when they announced the breakup plan, which frankly we found overly convoluted and nothing more than financial engineering."

The market has been so hard on Tyco in part because of the post-Enron air-raid sirens that go off when accounting practices smell at all funny. Forbes's Reuters piece quoted the manager of the Prudent Bear Fund: "I wouldn't touch Tyco with a 10-foot pole, and now people are seeing the lights come on and all the cockroaches scurrying around."

Kozlowski affected to appear hurt by the scrutiny. An AP story carried in the Washington Post said that Kozlowski found it "upsetting ... that Tyco's name was mentioned in articles about accounting scandals." Does that mean being compared to a cockroach isn't upsetting? - Keith Dawson

Tyco drops break-up plan, apologizes, posts loss (Reuters)

As Questions Persist, Tyco Halts Breakup Plan
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Tyco drops plan to break up firm

Tyco Abandons Plan to Split Into 4, Will Close 24 Plants (AP)

Tyco Abandons Plan for a Breakup, Posts Quarterly Loss of $1.9 Billion,,SB1019733723119293840,00.html
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