Tyco Electronics reports $1.37 billion loss

NEW YORK (Reuters) - Tyco Electronics Ltd. (TEL.N) said on Wednesday it lost almost $1.4 billion in its initial quarter as a stand-alone company, reflecting the settlement of lawsuits against former parent Tyco International Ltd. (TYC.N) and other costs.

Operating income missed Wall Street forecasts as compiled by Reuters Estimates, which excluded charges for the shareholder litigation settlement, separation-related costs, debt retirement and restructuring.

Shares of Tyco Electronics, a maker of connectors and other components used in cars, telecommunications and power systems, were down slightly in afternoon trading on the New York Stock Exchange after being up for much of the session.

Morningstar analyst Rick Hanna said the report contained nothing surprising, and the company's prospects were solid. Morningstar has a 5-star rating on the stock, and estimates its fair value at $50.

"The negative earnings was totally the result of the settlement of litigation," Hanna said. "A lot of what they're experiencing they had laid out."

Hanna said the company is well positioned to take advantage of growth in industrial and aerospace sectors, as well as autos, where the trend toward more electronics in cars supports long-term growth.

CEO Tom Lynch told analysts on a conference call he saw "an indication we're bottoming" in the U.S. auto sector, one of the company's biggest markets, citing order rates over the past few weeks.

Lynch also said the company is aiming for profit margins above 15 percent within three years. It plans to exit lower-margin businesses like power systems, and will spend up to $500 million by 2010 to restructure its manufacturing operations to cut costs.

The company said it lost $1.37 billion, or $2.75 per share, in the third quarter ended June 29. A year ago, when it was still a division of Tyco International Ltd., Tyco Electronics posted a profit of $298 million, or 60 cents a share.

Adjusted operating income was $461 million, or 49 cents per share. The analysts' average forecast was 51 cents a share, Reuters Estimates said.

Tyco Electronics said profit margins fell, citing lower production levels and an unfavorable product mix, while revenue rose 6 percent to $3.41 billion, compared with Wall Street forecasts for sales of $3.44 billion.

Three of the company's four divisions reported higher quarterly sales but only one -- undersea telecommunications, its smallest -- reported higher income from operations.

Tyco Electronics said orders from international auto and industrial markets were growing, while orders were down in the computer market and most North American markets.

The company said it expects fourth-quarter sales growth of 5 percent to 8 percent and an operating margin of 13 percent to 13.5 percent before items.

The company's stock was down 9 cents to $34.76.

(Reporting by Nick Zieminski, editing by Mark Porter)