Here is a look at more of Tuesday's top business stories:
Lucent posts loss
MURRAY HILL, N.J., Jan. 22 (UPI) -- Telecommunications equipment giant Lucent Technologies Inc., citing a severe telecom spending slump, said it posted a fiscal first quarter operating loss of $757 million, or 23 cents a share, compared with a loss of $1.44 billion, or 42 cents a share during the same period a year earlier.
Analysts on Wall Street had expected Lucent, the world's largest maker of telecom gear, to post a loss of 24 cents a share, according to Thomson Financial/First Call.
Revenues from ongoing operations fell to $3.47 billion from $3.8 billion a year ago and from fourth-quarter revenues of $4.8 billion.
Lucent said last month that its first quarter loss would be larger than Wall Street expected because of the prolonged spending slowdown. It said its loss from continuing operations would be between 23 cents and 26 cents on revenues ranging between $3.1 billion and $3.4 billion.
"Our business restructuring program is comprehensive, credible and it continues to drive steady sequential improvement in the bottom line. In terms of the top line, we delivered revenues that slightly exceeded the top of the range we announced in December," said Lucent Chairman Henry Schacht.
"We continue to make significant progress with every element of our business restructuring plan," said Frank D'Amelio, executive vice president and chief financial officer.
D'Amelio noted that since Lucent initiated Phase II of its restructuring program in August 2001, the company has reduced its run rate by $1.6 billion. This was achieved through the company's aggressive cost reduction efforts.
The Phase II goal is to reduce the expense run rate by $2 billion. The company had already reduced its expense run rate by $2 billion in Phase I.
The company has also reduced its staff by an additional 15,000 from the previous quarter. This was achieved through a combination of force reductions, outsourcing of some manufacturing operations, divestitures of businesses (including optical fiber), and attrition. The company's Phase II headcount goal is a reduction of 15,000 to 20,000 positions. At Dec. 31, 2001, Lucent's work force was 62,000, excluding Agere.
"There has been significant progress with our restructuring. I intend to support our efforts going forward and build on the momentum we've established," said Lucent President and Chief Executive Officer Patricia Russo.
Russo was named president and chief executive officer and a member of the board of directors on Jan. 7.
Looking ahead to the second fiscal quarter, D'Amelio said, "We continue to believe that revenues in the first fiscal quarter of 2002 represented the low point for Lucent sales in the current market downturn. For the second fiscal quarter, on a sequential basis, we expect our top line to improve approximately 10 to 15 percent and our bottom line to improve at an even greater rate."
D'Amelio also pointed out that the company's breakeven point for revenues will be reduced to $4.25 billion from $4.75 billion by the end of fiscal year 2002.
Earnings rise 5 percent at Merck & Co.
WHITEHOUSE STATION, N.J., Jan. 22 (UPI) -- Drug maker Merck & Co. Inc., a component of the Dow Jones industrial average, said its fourth quarter net income rose 5 percent to $1.86 billion, or 81 cents a share, from $1.76 billion, or 77 cents a share during the same period a year earlier.
Analysts on Wall Street had expected Merck to post a net income of 81 cents a share, according to Thomson Financial/First Call.
Fourth-quarter revenues rose 10 percent, to $12.56 billion from $11.47 billion a year earlier.
Merck said its five key growth drivers -- Zocor, Vioxx, Cozaar and Hyzaar, Fosamax and Singular -- collectively had increased sales of 20 percent for the fourth quarter, respectively, driving Merck's human health sales performance.
"Our five key growth drivers, which also are our five largest products, now account for 68 percent of Merck's worldwide human health sales and continue to lead Merck's income growth," said Raymond V. Gilmartin, chairman, president and chief executive officer.
"These medicines are true breakthroughs--they offer novel approaches to disease treatment, help large, underserved patient populations and are effective, well-tolerated and convenient. The market-growth potential for these medicines remains strong," he said.
Zocor, Merck's cholesterol-modifying medicine, had another strong quarter with worldwide sales reaching $2.1 billion for the period.
Vioxx was the product leader in 2001 within the coxib class for new prescription volume growth in the United States. Pain relief and gastrointestinal safety continue to be the primary needs in the arthritis and pain market. In December, Vioxx was approved for relief of acute pain and pain from dysmenorrhea in 13 member states of the European Union and in Norway and Iceland.
Cozaar and Hyzaar, Merck's high-blood pressure medicines, together are the No. 1 angiotensin II antagonists worldwide despite intense competition.
Global sales of Fosamax, a product for the treatment of postmenopausal osteoporosis, were $470 million this quarter.
Singulair, Merck's once-a-day leukotriene antagonist, is a prescribed asthma controller. Global sales for Singulair for the quarter were $350 million.
Looking ahead, Merck said it remains comfortable with 2002 earnings growth forecasts. Merck, normally a stalwart among top drug makers, shocked Wall Street last month when it warned that 2002 profits would be little changed from 2001 as generic competitors continue to eat away at its prescription drug sales.
Tyco International to split into 4 companies
PEMBROKE, Bermuda, Jan. 22 (UPI) -- Conglomerate Tyco International Ltd. said it plans to unlock tens of billions of dollars in shareholder value by separating into four independent, publicly traded companies.
Tyco said it would create four independent companies: security and electronics; health care; fire protection; and flow control and financial services.
Tyco said it believes these actions will lead to substantially greater total shareholder value by creating independent companies that will be more appropriately valued by the market.
Each new public company created from these transactions will be a proven industry leader, and each will go forward with a global market position; a strong and experienced management team; an entrepreneurial culture; an independent board of directors and significant financial strength, Tyco said.
Under the plan, unanimously approved by the company's board of directors, Tyco's world-leading healthcare; fire protection & flow control; and financial services businesses will be taken public through initial public offerings and then distributed to Tyco shareholders.
Tyco's Security & Electronics businesses will be combined as a fourth independent, publicly traded company. Tyco Plastics, one of the United States' largest manufacturers of plastic film and other plastic products, will be sold.
Tyco said it expects to complete the first of these initial public offering -- Tyco Capital in the second quarter of this year and to complete all of the planned transactions by the end of 2002.
Each IPO, distribution or sale of a business will be subject to customary approvals. No tax approvals are required for these transactions. The distributions to shareholders are expected to be treated as returns of capital, which minimize the tax consequences to most shareholders. Each company be based in Bermuda.
In addition to creating substantial value for Tyco shareholders, these transactions will have a positive effect on Tyco's balance sheet. Using proceeds from the IPOs and the sale of its Plastics business, Tyco expects to eliminate at least $11 billion of debt.
"This is a bold, shareholder-value driven plan that we believe will create extraordinary near and long-term benefits for Tyco's shareholders and bondholders, as well as for our employees and customers," said L. Dennis Kozlowski, chairman and chief executive officer.
"Over the past decade, Tyco's share price has increased ten-fold as we have used Tyco's size, access to capital and operating philosophy to build world-class healthcare, electronics, telecommunications, security, fire protection, flow control, and financial services businesses. These businesses have now developed to a size and stage where they can thrive on their own and perhaps be even more agile than Tyco. The plan we are announcing today is the logical extension of the same value creation strategy we have successfully pursued for nearly a decade," he said.
Tyco's Security & Electronics business would consist of the world's largest and most respected residential and commercial security services company, and one of the world's largest manufacturers of a broad range of high quality electronic component products; multi-layer printed circuit boards; electrical and electronic components; power systems; and fiber optic and wireless interconnection solutions.
Dennis Kozlowski will be Chairman and CEO, and Mark Swartz will be chief financial officer, of the Security & Electronics company.
Kendall Healthcare manufactures and markets a broad range of wound care, needles and syringes, vascular therapy, urological care, incontinence care, sharps disposal and nursing care products under market-leading brand names, including Kerlix and Curity. U.S. Surgical provides innovative wound closure products and laparoscopic instrumentation. ValleyLab designs, develops and manufactures electro- and ultrasonic surgery systems, which are continuing to raise the standards in patient care and safety in the operating room.
Mallinckrodt is a global manufacturer of healthcare products for the respiratory, alternate care, bulk pharmaceutical and diagnostic imaging markets.
Rich Meelia, who has served as President of Tyco Healthcare since 1995, will be president and CEO. Chuck Dockendorff will continue to serve as the company's CFO.
Healthcare manufactures, markets and distributes its products directly to hospitals and medical professionals, as well as through independent distributors, around the world.
Tyco's Fire Protection & Flow Control is a leading provider of fire detection, prevention and suppression products, installation and services, and a top global manufacturer of standard and highly specialized valve and control products.
The two businesses are being combined to take advantage of significant operating and marketing synergies.
The two groups serve a host of common customers and market segments, and a substantial portion of Tyco's valve and flow control products are used by the company's fire protection businesses. Fire Protection & Flow Control will also include Allied Tube, the leading fire protection pipe manufacturer in the United States, and Tyco Infrastructure Services (formerly Earth Tech), a global leader in the water, environmental, transportation, and construction marketplace.
Tyco's fire protection units design, install and service automatic fire sprinkler systems, fire alarm and detection systems, and special hazard suppression systems.
Tyco's flow control operations manufacture valves in a wide variety of configurations serving markets in the water distribution, power generation, chemical, oil and gas, pulp and paper, commercial irrigation, mining and industrial process, and plumbing industries, among others.
Fire Protection & Flow Control will be run by CEO Jerry Boggess, who has led Tyco's Fire business since 1989. Jack Guarnieri, a senior finance executive within the flow control business, will be its CFO.
Tyco Capital is a leading, global source of financing and leasing capital and an advisor for companies in more than 30 industries. Managing approximately $50 billion in assets across a diversified portfolio, Tyco Capital, formerly known as CIT, offers vendor, equipment, factoring, consumer, and structured financing capabilities. Tyco Capital operates extensively in the United States and Canada with strategic locations in Europe, Latin and South America, and the Pacific Rim.
Al Gamper will continue to serve as president and CEO of Tyco Capital. Joe Leone will continue as executive vice president and CFO.
Alcan posts loss
MONTREAL, Jan. 22 (UPI) -- Alcan Inc., the world's second-largest aluminum maker, said it posted a fourth quarter loss of $357 million loss, or $1.12 a share after taking a $446 million charge, related to its restructuring program.
The loss compared with a net income of $110 million, or 34 cents a share during the same period a year earlier.
Excluding nonrecurring items and foreign currency translation effects, Alcan posted a net profit of $73 million, or 22 cents a share in the latest fourth quarter, compared with a profit of $132 million, or 41 cents a share during the same period a year earlier.
Revenues declined to $3.04 billion from $3.18 billion.
