TRENTON, New Jersey ? High-tech manufacturing and services conglomerate Tyco International Ltd. said on Thursday its third-quarter profit dropped 27 percent as rising materials costs and two charges outweighed higher revenue.

Tyco, best known for its ADT home alarm systems, said plans to break up into three companies by the end of March 2007 remain on track. It also said the company is selling one of its electronics businesses, Tyco Printed Circuit Group, for $226 million to TTM Technologies Inc.

Tyco, which has its operational headquarters in West Windsor but is nominally based in Bermuda, said net income for the quarter ended June 30 was $868 million, or 42 cents per share, compared with $1.19 billion, or 56 cents per share, a year earlier.

The latest quarter includes two charges of 3 cents each per share, for separation costs and for an ongoing programme replacing about 35 million fire sprinklers that Tyco recalled in 2001 because they may not work during fires. The company also reported stock option expense of 1 cent per share.

Income from continuing operations was $896 million, or 43 cents per share. Excluding the 6 cents in charges, income was 49 cents per share, a penny more than the consensus forecast of analysts surveyed by Thomson Financial. Revenue rose 5.1 percent to $10.5 billion from $10 billion a year ago.

?Obviously, we started the year off not where we wanted to be,? but improved earnings per share from 39 cents in the first quarter to the current 49 cents, Tyco chairman and chief executive Ed Breen told analysts during a conference call. ?We had good growth, improved operating profit and good cash flow? in the third quarter.

Merrill Lynch analyst John Inch wrote in a research report that the plan to sell Print Circuit Group ?is generally positive as this business has been a laggard for an extended period? and demonstrates Tyco?s ongoing effort to streamline operations ahead of its breakup. But he noted that the health care unit was unexpectedly weak. Tyco?s electronics and health care businesses, the units the company plans to sell, saw operating income drop 7 percent and 15 percent, respectively. Electronics was hurt by higher costs for copper, gold and other metals.

Of the businesses being kept, operating income rose 5 percent in fire and security but fell 44 percent for engineered products and services despite a 7 percent rise in revenues.

Morgan Stanley analyst Scott Davis wrote that business conditions seem to have stabilised across most of Tyco?s businesses.

?Another boring quarter of in-line results is actually pretty encouraging for (Tyco), where we think investors have already set a very low bar,? Davis wrote.

During the quarter, Tyco repurchased 41 million shares for $1.1 billion.

The company forecast income, excluding items, of 47 cents to 49 cents per share for the fourth quarter, versus the Thomson estimate of 50 cents per share.

?This marks the first quarter in over a year that Tyco has met overall expectations and/or has not had to lower guidance,? Inch wrote. Merrill Lynch and Morgan Stanley each own Tyco shares or do business with the company. For the first nine months, net income rose 16 percent to $2.5 billion, or $1.19 per share, from $2.1 billion, or $1 per share. Revenues edged up nearly 3 percent, to $30.2 billion from $29.4 billion. Tyco shares fell 41 cents to $25.95, near their 52-week low of $24.65, in trading on Thursday on the New York Stock Exchange.