Tyco Electronics 2nd-quarter forecast falls short

NEW YORK (Reuters) - Tyco Electronics Ltd's (TEL.N) second-quarter profit forecast fell short of Wall Street expectations due to rising raw material prices, sending the electronic connector maker's shares down 2.4 percent.

The disappointing forecast came despite first-quarter results that beat analyst estimates. The company also raised its full-year forecast.

"Metal will be a net headwind in the second half of the year," Chief Executive Tom Lynch said on a conference call. citing higher copper and gold prices. "We are being more aggressive on our price increases to offset this."

Net earnings rose to $265 million, or 59 cents per share, in the first quarter ended December 24 from $172 million, or 37 cents per share, a year earlier.

Excluding acquisition-related charges, the world's biggest maker of connectors earned 73 cents per share, 5 cents ahead of average analyst forecasts, according to Thomson Reuters I/B/E/S.

Revenue rose 11 percent to $3.2 billion, slightly ahead of Wall Street forecasts.

Tyco Electronics said its auto, energy and telecommunications markets showed momentum and its acquisition of ADC, completed last month, will add to earnings.

FORECAST DISAPPOINTS

The company expects to earn an adjusted 70 cents to 74 cents a share in the second quarter, while analysts, on average, expected 75 cents.

It estimated fiscal 2011 adjusted earnings of $3.05 to $3.20 per share, on sales of $13.9 billion to $14.3 billion. That compares with analyst estimates of $3.07 per share on sales of $14.03 billion.

Among the positive factors facing the company, demand from China's auto sector was strong during the quarter, CEO Lynch told analysts.

The company is also benefiting from the push toward more electronics content in cars, including drivers' increasing use of smartphones, as well as new safety features and more use of electronics to improve engine efficiency.

"We were worried that content would go down, maybe not significantly, but it would reverse its long trend and go down because people might move (to) smaller cars," Lynch said. "What we are seeing in every region, in virtually every model, the content keeps going up."

The company's shares were down 86 cents at $35.17 on the New York Stock Exchange.

(Reporting by Nick Zieminski; Editing by Lisa Von Ahn and Derek Caney)