* Q2 shr $0.73 vs. Wall Street view $0.68
* Q2 sales $3.99 bln
* Sees Q3 EPS $0.70 vs. $0.79 Wall St view
* Shares down 1.4 percent (Adds 2011 outlook, CEO comments, share movement)
NEW YORK, April 28 Tyco International Ltd (TYC.N), which is at the center of takeover speculation, beat Wall Street earnings forecasts on Thursday on strength at its core security division, but forecast current-quarter results below analysts' expectations.
Shares of the maker of security systems for homes and businesses fell 1.4 percent to $48.20 in premarket trading.
Tyco, which also makes fire and safety equipment and valves for the energy industry, said increased corporate expenses and a higher tax rate would pressure results this quarter despite better business conditions.
It estimated earnings of 70 cents a share. Analysts on average have expected 79 cents, according to Thomson Reuters I/B/E/S.
However, Tyco raised its full-year forecast, saying it expected a profit of $3.02 to $3.07 per share from continuing operations, which brackets analysts' estimates of $3.05.
In its second quarter ended on March 25, Tyco earned $315 million, or 67 cents per share, up from $310 million, or 65 cents per share, a year earlier.
Earnings from continuing operations, excluding special items, were 73 cents per share, 5 cents ahead of analysts' estimates.
Sales slipped 2 percent to $3.99 billion, matching forecasts. Year-earlier revenue included a business in which Tyco sold a majority stake. Excluding those results, sales were up 6 percent.
The security solutions business showed a 12 percent revenue increase, but profit there jumped 25 percent amid demand from commercial customers and growth in recurring service revenue, which commands a higher margin.
Tyco completed its $1.9 billion acquisition of Broadview Security in May 2010, expanding its security offerings while raising the number of their customers to almost 9 million worldwide.
That access to people's homes has made Tyco attractive as a potential takeover target.
People familiar with the matter have said France's Schneider Electric SA (SCHN.PA) held early discussions about buying the company, which lifted Tyco shares to nearly three-year highs. Schneider's CEO later ruled out a deal that size, and Tyco shares retreated. [ID:nLDE73J1X1]
Asked on Thursday's conference call whether Tyco should remain a stand-alone company, Chief Executive Officer Ed Breen said: "We like the portfolio how it is, (but) we always look at all the other alternatives to see if something makes more sense."
Breen did not directly address Schneider. In the past, the company has declined to comment on speculation. (Reporting by Nick Zieminski; Editing by Lisa Von Ahn)