UPDATE 3-ADT helps lift Tyco quarterly profit, shares slip

* Q1 share $0.65 ex items, matching estimates

* Q1 rev down 4 pct to $4.25 bln

* Sees 2010 EPS ex items $2.30 to $2.50 (Adds details on segment performance, 2010 outlook)

NEW YORK, Jan 28 (Reuters) - Tyco International Ltd (TYC.N) reported a 10 percent increase in quarterly net income with improved margins in three of its five units, including its big ADT security services division, which is set to expand after the $1.9 billion purchase of a rival.

The industrial conglomerate kept its 2010 forecast unchanged, noting continued weakness in its flow control segment, which makes valves, pipes and thermal controls for oil and gas, mining, chemicals and construction markets. Flow control orders were down from the prior quarter, but Tyco said it will recover from cyclical lows in the second half of the year.

"Maybe we will start to see a little bit of a different trend in orders come in the near future. We haven't seen it yet, but it would appear that we are getting closer," Chief Executive Ed Breen said on a conference call.

Tyco shares slipped about 18 cents to $36.32 in early trading.

First-quarter net earnings rose to $303 million, or 63 cents per share, in the period that ended Dec. 25, from $277 million, or 58 cents per share, a year earlier.

Earnings from continuing operations were 65 cents share. Revenue dropped 4 percent to $4.25 billion.

The results were at the high end of the company's recently raised earnings forecast, while sales matched the company's Jan. 18 estimate.

The maker of security and fire-control systems, as well as valves and electrical products, said its efforts to cut costs were paying off. It also cited growth in sales of services and so-called recurring revenue from customers.

Weakness among commercial customers kept ADT revenue gains to just 1 percent, but ADT's operating income jumped 14 percent amid growth in higher-margin services and cost cutting.

Sales and profits were down in Tyco's segment that makes valves and thermal controls, and in two other areas, electrical and metal products, and safety products. Profits in its fire protection division rose despite lower revenue.

This month, Tyco announced its largest acquisition since its 2007 breakup with a plan to buy Brink's Home Security Holdings, which operates as Broadview Security CFL.N, for $1.9 billion to combine it with ADT.

It expects the deal to add to earnings within a year of its closing. The combination will expand Tyco's North American residential and small business accounts to more than 6 million from about 4.8 million.

Tyco executives said on Thursday they did not expect any regulatory obstacles to the deal, which will give Tyco about a 25 percent market share, since there are hundreds of local competitors.

Tyco forecast 2010 earnings before special items of $2.30 to $2.50 per share, below Wall Street estimates of $2.56 a share. But it said the forecast was not counting on a meaningful pick-up in economic activity this year, adding that if orders improve, it could help results in the second half of the year. (Reporting by Nick Zieminski; Editing by Derek Caney and Maureen Bavdek)