NEW YORK (CNNfn) - Shares of industrial conglomerate Tyco International Ltd. fell sharply in afternoon trading Wednesday on unconfirmed reports of accounting problems, traders said. The company denied the reports as unfounded and malicious.
Officials of Hamilton, Bermuda-based Tyco said that there is no corporate development that would justify the irregular trading sparked by what they called rumors. The stock dropped 7-3/8 to 96 a share on the New York Stock Exchange before trading was halted for an order imbalance.
The company is requesting that the SEC and NYSE identify the source of the false rumors and take appropriate action, officials said.
"I heard the reports being circulated about our company, and I can state unequivocally that they are false and baseless," L. Dennis Kozlowski, Tyco's chairman and chief executive officer, said in the statement.
"We are confident results for our fourth fiscal quarter, to be reported next week, should exceed consensus earnings estimates. We also are comfortable with the consensus earnings estimates for fiscal year 2000," he added.
Wall Street analysts expect the company to post fourth-quarter profits of $0.89 per share and $3.03 per share for the year, according to earnings forecast firm First Call/Thomson Financial
David Tice, a Dallas-based researcher who wrote a report that apparently might have helped spark the sell-off, said he is not charging Tyco (TYC) with anything illegal or improper under established accounting standards.
Rather he said his sell recommendation is based on the belief that Wall Street has been blinded by billions in special charges the acquisition-hungry company has taken in recent years.
"We just said they took all these charges and benefited," said Tice of David W. Tice & Associates, a Dallas firm. "Maybe that's not as exciting as saying improper accounting practices. That doesn't mean its an impropriety or against (accounting standards). We are just saying that Wall Street has been looking at earnings before charges."
Tice's report was sent out Friday and received by institutional investor clients on Monday. However, Tyco shares didn't react until Wednesday as news of the report filtered out into the market.
One analyst who saw Tice's report disagreed with it, saying the drop in stock price was unjustified.
"It's a bad report and the more I look at it the worse it gets," said Jack Blackstock, analyst with Donaldson Lufkin & Jenrette Securities. "I hope they covered their short position because I think the stock is going up tomorrow. Whether it does or not, I'm buying."
Tice said his firm has no short positions or puts on Tyco's stock.
After the stock had been halted by an order imbalance earlier in the afternoon, the halt was changed to one for pending news at 3:55 p.m., and an official with the New York stock exchange said the company was expected to issue a statement Wednesday evening. A 7 a.m. Thursday conference call for analysts is also expected.
"I don't think they want to wallow in the mud but they can't ignore this," said Blackstock.
Before being halted for an order imbalance, Tyco stock was down 7-3/8 at 96 on the New York Stock Exchange. Its stock had show steady growth over the last year, from 47-1/8 a year ago to Tuesday's close of 103-3/8.
Tyco has grown rapidly in recent years through a series of acquisitions, making it one of the nation's biggest corporate acquirers. Its areas of businesses include disposable medical products, electrical components, fire protection and underwater telecommunications.
Tyco's headquarters is in Hamilton, Bermuda and it has corporate offices in Exeter, N.H.
-- Reuters contributed to this report