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10 Ways to Prop Up Tyco


Tyco Announces Plan To Unlock Billions of Dollars of Shareholder Value--Company To Separate Into Four Independent, Publicly Traded Companies -- headline, Jan. 22.

Tyco Scraps Break-Up Plan; Posts Loss, Cuts Forecast, and Unveils Job Cuts -- headline, Apr. 25.

To: Board of Directors, Tyco International

From: Dennis Kozlowski, chairman and CEO

Re: Cash Money

Unbelievable! A year ago, BusinessWeek had me as its cover boy--"The Most Aggressive CEO." This year, Tyco (TYC) stock is off 70%. No matter how often I repeat, "There is no liquidity crisis. There is no liquidity crisis. There is no liquidity crisis," Wall Street keeps wondering how we'll get the cash to pay our debts. Skeptics doubt we can raise billions by selling CIT Group. My credibility, they say, is shot. I say: The Street wants to see the money? We'll show them money. Herewith, 10 fresh cash-raising initiatives:

1. Think how much cash changes hands each year in this country's fragmented fund-raising industry. Bake sales. Student car washes. Talent auctions. Bingo. We can get our cut. With Tyco stock, we will buy a bunch of these operations, roll them up, and "Tycoize" them into a cash machine. This makes my mouth water: We pay stock and we get back cash--plus first dibs on all unsold banana bread.

2. As you well know, one of our core competencies is avoiding U.S. taxes by using a mail drop "headquarters" in Bermuda while still calling the shots from New Hampshire. We can leverage our tax-beating knowhow into a high-margin service for individuals. (Attn. CFO: Schedule meeting re: joint venture with H&R Block.)

3. Never have I been above stealing a good idea. So don't doubt me when I ask if you recall when Sean "Puffy" Combs's credibility as a crazy gangster ran low. What did he do? He and J. Lo stepped out on the town and stumbled into a little nightclub "incident." Puffy's street cred soared! While awaiting trial, he launched his own line of clothes, tapping a fresh stream of royalties. For the truly dangerous CEO, the phat fashion label will soon be...D. Kozzy.

4. We're already at work on this: We lug our stacks of 2002 financial projections to the recycling center. We make sure all paper is weighed precisely, so recyclers pay us full pulping value.

5. We have long let Tyco's operating managers run their businesses independently. Now I wonder if we have not foregone cross-selling opportunities. How many of our fire-alarm customers also might want surgical sutures? Don't buyers of clothes hangers also yearn for valves and sundry flow controls?

6. In all honesty, I'm sick of being called Jack Welch Jr. (It made my ex-wife a tad nervous, too). But I bet Jack will set me up with his book agent. A book by me will pull in plenty of cash, especially now as everyone can only wonder what I'll say next. Tentative title: Straight Off the Top of My Head.

7. Flexibility is a byword at Tyco. This has me thinking C.R. Bard. I warmed to the Bard people as we prepared this year to buy their medical-supply business. Then we ran into the current unpleasantness and had to break off the deal. I bet the feeling was mutual. Maybe Bard can buy our health-care unit instead.

8. We have commissioned Sotheby's to auction signed copies of some of last year's triumphant articles about me. Imagine how much an original Chicago Daily Tribune headlined "Dewey Defeats Truman" must fetch.

9. Ken Lay's wife, Linda, is handling post-Enron adversity with aplomb, opening Jus' Stuff, a shop where she is selling her old home furnishings. As I've said many times, Tyco has nothing to do with Enron. But that doesn't mean we can't also sell stuff from the 24 plants we are closing. HR is checking to see if we can partner on this with the 7,100 employees we are laying off.

10. Stop financial engineering--the mergers, spin-offs, and initial public offerings. Run our businesses just for the cash they can generate. On second thought, scratch that--no one will ever believe me. By Robert Barker


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