Tyco International Ltd shares fell for a second day as confidence in Chief Executive Officer Dennis Kozlowski waned after he reversed plans to split the conglomerate into four.
The stock dropped US$0.85 Friday, or 4.1 percent, to US$19.90, its lowest level in about four years. It fell 20 percent yesterday after Kozlowski said his idea to split the company was a mistake.
Tyco has lost more than US$75 billion in market value this year.
"Typically, as a CEO, you're given one chance to make a mistake," said Kevin McCloskey, who helps manage US$200 billion at Federated Investors Inc, which holds 3.9 million shares of Tyco. "Maybe this is his one chance."
Tyco said that it plans to sell shares in the CIT Group finance arm to the public for about US$7.1 billion as it cut profit forecasts for the year ending in September. Some worry that a cash crunch is possible if Tyco can't separate the finance unit fast enough.
"The company faces a daunting challenge to sharply increase its liquidity during a time of increased economic uncertainty," wrote Prudential Securities Inc analyst Nicholas Heymann, who has a "hold" on Tyco. "Until this is completed, we anticipate Tyco's share price will remain under significant pressure."
The shares began falling at the beginning of the year amid questions about Tyco's accounting methods, growth strategy and breakup plan. Kozlowski unveiled his plan Jan. 22.
Kozlowski built Tyco by making more than US$64 billion in acquisitions over an eight-year period ended last year. Investor and analyst suspicion about acquisition accounting has dogged Tyco off and on for more than two years. Tyco has always denied any misleading accounting.
In January, Kozlowski said the breakup was to "unlock shareholder value." Yesterday, he apologized to shareholders and took blame for not realizing the turn in strategy would take investors by surprise.
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