Tyco Electronics reports a profit and a warning

Tyco Electronics Ltd., the Berwyn company that is the world's biggest maker of electronic connectors, today said it earned $537 million in the third quarter, reversing a loss of $507 million in last year's period.

The company said the profit came on strong demand for its auto-parts components. But signs of slowing sales pushed shares down the most since the company spun off from Tyco International Ltd. last year.

Profit from continuing operations was 66 cents a share compared with a loss of $1.88in the year-ago quarter. Revenue rose 19 percent to $3.91 billion in the quarter ended June 27.

However, Tyco Electronics narrowed its forecast for full-year results. It also raised its stock buyback limit by $750 million to $2 billion.

Tyco Electronics, which gets more than two-thirds of annual revenue outside North America, won a higher percentage of parts on vehicles sold outside the U.S., where rising fuel costs cut sales last month to the lowest annual rate since 1993.

Chief Executive Officer Thomas Lynch said auto order rates in the U.S. are weakening and Europe's increases may slow as well.

"We're cautious," Lynch said in an interview. "It's not like orders are dropping off the end of the earth here, but we do see a little bit of a slowdown."

Tyco Electronics closed down $1.83, or 5.1 percent, to $33.74 in New York Stock Exchange composite trading.

In earlier trading yesterday, the shares dropped 13 percent, the biggest decline since the company became publicly traded in June 2007.

In the third quarter, per-share profit excluding special items was 70 cents, more than the 67-cent average estimate of 10 analysts surveyed by Bloomberg.

The company forecast that full-year profit excluding special items will be $2.63 to $2.65 a share, narrowing the previous estimate of $2.60 to $2.66. It said fourth-quarter results without special items will be 65 cents to 67 cents, the company said. That's below the 69-cent and $2.66 averages from analysts polled by Bloomberg.

Lynch said the company said it reduced its high-end estimate in part because it expects to record a New York State telecommunications contract in fiscal 2009 rather than in the fourth quarter of 2008, reducing the forecast by 1 cent.