Tyco Announces Plans to Close 300 Plants
Tyco International Ltd. (Pembroke, Bermuda) announced that it would close 300 plants over three years, cutting $1 billion in costs by 2006, and its chairman vowed to clean up the sprawling industrial conglomerate plagued by a year of turmoil and scandal. Tyco reported that it would scale back its manufacturing facilities to 1,700 from 2,000 by 2006, slashing its manufacturing space by 20,000,000ft².
Tyco plans to generate revenue of up to $44 billion in 2006, up from an estimated $38 billion this fiscal year, which ends September 30, 2003. Profit is expected to top $4.9 billion in 2006, up from about $3 billion this year. Meanwhile, Tyco will cut debt in half to between $10 billion and $11 billion by 2006, according to Tyco's financial model.
The company has been embroiled in controversy for more than a year, beginning with a breakup plan engineered and then abandoned by its former chief executive, Dennis Kozlowski. Kozlowski abruptly quit in June and then was charged with evading sales tax on millions of dollars in art purchases. Later, he and three other senior leaders were charged with looting company coffers.
Tyco Chairman Edward Breen, who took over last year, has been working to overhaul management and restore the company's tattered image with investors. Breen commented that he was "pained" and "disgusted" by the company's latest difficulty, and pledged that more "heads will roll" if he unearths additional problems.