Tyco International Ltd.?s second-quarter profit fell 75 percent because of costs to retire debt, write down assets and establish a reserve for a three-year-old Securities and Exchange Commission investigation. The company reduced its 2005 profit forecast.

Net income dropped to $192 million, or nine cents a share, from $783 million, or 37 cents, a year earlier, the Bermuda-based conglomerate said in a statement yesterday. Sales in the quarter ended March 31 rose 6.5 percent to $10.46 billion.

Higher commodity costs, a slowdown in the European auto market, and lower-than-expected savings from businesses such as industrial valves is hurting profit, chief executive officer Edward Breen said on a conference call. Tyco, the world?s biggest maker of security systems and electronic connectors, is also considering the sale of its slower growing plastics unit.

?They just haven?t made as much progress as they had hoped,? said Steve Hoedt, an analyst in Cleveland with National City, which owned about 1.76 million Tyco shares.

Tyco reduced its earnings forecast for the year to a gain of as much as $1.93 a share, five cents less than its prior forecast. Tyco also lowered its estimate of free cash flow, or what?s left from operations after certain expenses. Breen has spent almost three years restructuring Tyco since the ouster of L. Dennis Kozlowski, shedding acquired businesses and slicing the company?s net debt by 50 percent. The company repurchased $932 million in convertible debt in the quarter.

European automotive markets account for more than 25 percent of the company?s electronics sales for items such as sensors and power-level relays.

Shares of Tyco, run from West Windsor, New Jersey, fell $2.26 to $28.46 at 2:46 p.m. in New York Stock Exchange composite trading. More than 75 million shares changed hands, making it the most actively traded U.S. stock. The decline is the biggest in more than two years.

?They?ve been somewhat disappointing,? said David Dreman, chairman of Dreman Value Management in Jersey City, New Jersey, which owns about 4.3 million Tyco shares. ?We?re seeing now the kind of market where if you miss at all, you?re getting murdered.?

Plastics accounted for $1.74 billion of the company?s $40.15 billion in sales in the fiscal year ended September 30.

Tyco may sell additional businesses that generate as much as $2.5 billion in revenue to improve working capital, Breen said. Together with plastics, that would mean selling units that are responsible for about ten percent of sales.

The company received US approval today to sell its undersea cable network to India?s Videsh Sanchar Nigam Ltd.

Tyco had costs nine cents a share to write down assets at the hanger portion of the plastics business in preparation for a possible sale, 26 cents for early debt retirement and two cents to establish the reserve. Excluding those costs and a loss from discontinued operations, the company said profit would have been 48 cents a share. On that basis, Tyco was expected to earn 47 cents, the average estimate of 15 analysts surveyed by Thomson Financial. ? Bloomberg