President and chief executive officer, Tyco International
Born: 1956, in Pennsylvania.
Education: Grove City College, BS, 1978.
Family: Married Lynn Branster; children: three.
Career: General Instruments, 1978–1988, salesman; 1988–1994, senior vice president of sales; 1994–1997, various positions as president of Broadband Networks Group, president of Eastern Operations for the Communications Division, and vice president of Terrestrial Systems; 1997–2000, chairman, president, and chief executive officer; Motorola, 2000–2001, executive vice president of Motorola, president of Broadband Communications Sector (BCS), and subsequently head of the Networks Sector (which included the Global Telecom Solutions Sector; the Commercial, Government, and Industrial Solutions Sector; and BCS); 2001, president; 2002, president and chief operating officer; Tyco International, 2002–, president and chief executive officer.
Awards: Vanguard Award, National Cable Television Association, 1998; one of 100 Most Influential People in Cable, CableFAX magazine, 1999.
Address: Tyco International, 90 Pitts Bay Road, 2nd Floor, Pembroke HM 08, Bermuda; Tyco International (U.S.), 9 Roszel Road, Princeton, New Jersey 08540; http://www.tyco.com.
■ Edward D. Breen took over as president and CEO of the troubled Tyco International in July 2002. Made notorious by scandals that included questionable accounting practices and former CEO Dennis Kozlowski's unwarranted personal use of company funds, Tyco had become known as one of America's most corrupt companies. According to industry analysts, Breen's reputation as a man of honesty and integrity, as much as his standing as a successful, world-caliber executive at both General Instruments and Motorola, landed him the position at Tyco.
Breen grew up in suburban Pennsylvania and attended Grove City College, a small Christian school just north of Pittsburgh. He began his career with General Instruments (GI), where he sold cable television converter boxes. Breen was successful enough as a salesman to be appointed senior vice president of sales at GI in 1988. In this position he oversaw the worldwide sales organization for the company's terrestrial products, an organization that encompassed sales personnel and activities in the United States, Canada, Latin America, Europe, and Asia Pacific.
Breen's managerial capabilities led to a series of appointments as the head of several subdivisions at GI, including the Broadband Networks Group and Eastern Operations for the Communications Division. He was eventually appointed executive vice president of Terrestrial Systems, where he directed the sales of terrestrial products worldwide and managed the division's strategic business units, including the distribution and telephony units. In 1997 he took over the reins as chairman and CEO at GI.
During his career at GI, Breen was credited with many of the company's successes. He led GI through the digital broadband revolution and expanded the company's market share in cable set-top boxes. According to one of his former bosses at GI, Hal Krisbergh, Breen's salesmanship led the company to dominate the cable set-top box market, which expanded from $200 million to $10 billion within 10 years. One of the keys to Breen's success in this area was his ability to persuade customers to sign up for multiyear contracts, which effectively shut out rivals. In an interview with John Kador for Electronic Business , Krisbergh noted, "Stars shine early, and Ed Breen was no exception" (February 2002).
In January 2000 Motorola bought GI, primarily because the former company had been attempting to enter the broadband business without much success. After the merger Breen was named executive vice president of Motorola and president of the company's Broadband Communications Sector. He quickly set out to integrate the two companies' cable businesses.
Having established himself as a key executive within Motorola, Breen was made head of the company's Network Sector. In October 2001 he was named Motorola's president, and on January 1, 2002, he assumed the additional duties of COO. Over time, Breen acquired a reputation for instituting cost-cutting and other programs to make operations more efficient and effective. For example, when he first joined the company, he promptly disposed of overlapping modems and discontinued unprofitable models. During his time at Motorola, Breen was credited with playing an instrumental role in leading the company back to profitability.
Although he was seen as the heir apparent to Motorola's chief executive Christopher Galvin, in late July 2002, after seven months as COO, Breen decided to accept the job of CEO at the troubled Tyco International. He had previously turned down the top jobs at Lucent Technologies and Nortel Networks Corporation. Industry insiders were surprised by Breen's decision to take over the helm of a company that not only was carrying $25 billion in debt but also was suspect for its overly acquisitive growth strategy. Some analysts speculated that Breen's decision had more to do with personal ambition than with dissatisfaction at Motorola, where the CEO was many years away from retirement age.
Breen's reputation soon caused Tyco's stock to soar 53 percent, adding $9 billion to its market value within two weeks of the announcement of his taking over the position of CEO. He quickly developed specific plans to further repair the reputation of the company. In Lightwave , Breen was quoted as saying that one of his top priorities was to "restore confidence in Tyco with our employees, suppliers, customers, and the financial community and enhance and strengthen the core businesses" (October 2002). One of the first steps he took toward this end was to oust most of the top personnel from the previous administration. In an interview with Len Boselovic for the Pittsburgh Post-Gazette , Breen noted, "I went in with two thoughts: I needed to replace the board and I needed to replace most of the senior management" (November 16, 2003).
Despite Breen's belief that some of the company's directors were worth keeping, investors persuaded him to make a clean sweep. He eventually replaced the entire corporate board and 100 of Tyco's top 110 executives. He also created the monitorial position of senior vice president of corporate governance. Breen's next move was to start clearing up Tyco's financial mess, which included $26 billion of debt and a market value that had declined by some $90 billion by the time he assumed control of the company.
Part of Breen's plan for mending Tyco was to shift the company's growth strategy away from dependence on acquisitions toward maximization of the profitability of existing businesses. He focused on reducing the company's debt load in part by selling off some of the holdings the company had obtained during its overly aggressive acquisitions binge. On November 4, 2003, Breen announced his intention to sell Tyco Global Network, a $3.5 billion undersea fiber-optic network that had been built during the height of the telecom boom. He also produced plans to sell 50 smaller businesses and lay off 7,200 of 260,000 employees, and he greatly reduced executive compensation, limiting bonus payouts for executives to $29 million in 2003, compared with the $79 million executives had received the year before. Breen's announcement of these strategies drove Tyco's stock up 7 percent on November 4, 2003, to $22.50, the highest price the stock had reached since he took over.
According to industry analysts, Breen had many attributes that make a good manager. In Electronic Business , his former boss Krisbergh noted, "He is quickly able to identify strategic impacts of decisions; he recruits well; and he can manage large organizations through major technical innovations" (February 2002). Breen was also well regarded for his willingness to cut losses and abandon projects that he saw as being ultimately unprofitable.
Breen had had a reputation for being able to change the dysfunctional aspects of a company's culture, which was one of the main reasons he was hired by Tyco. High-tech market analysts note that Breen had the hustle and conviction to "make a bet" on products and then program and move forward quickly. Breen also placed a strong emphasis on customers—some analysts say to the point of reverence.
Perhaps the greatest aspect of Breen's importance to Tyco was his integrity, as evidenced by traits such as his dislike of ostentatious management perks, in a place where the former CEO notoriously had spent $6,000 on a shower curtain. Although he received a high salary for his duties, he was modest by nature and told Melanie Warner in an interview in Fortune that when he first saw his own office, which included a kitchen the size of some New York City apartments, he thought, "This is embarrassing" (April 28, 2003). He has since moved the corporate headquarters from New York City to more spartan facilities in New Jersey. Ralph Whitworth of Relational Investors summed up Breen's qualities to Warner in Fortune this way: "Ed is full of energy and has impeccable integrity" (April 28, 2003).
Breen's effort to restore Tyco's image and profitability was an ongoing battle, as the Securities and Exchange Commission and the Internal Revenue Service continued to probe Tyco in 2003 concerning accounting improprieties. Nevertheless, Breen remained confident that he could spur Tyco to regrowth. His goal was to increase earnings by 10 to 12 percent, to approximately $3 billion in 2005. He said that once Tyco's operations had become more efficient, he would look back into the prospect of making acquisitions.
See also entries on General Instruments, Motorola, Inc., and Tyco International Ltd. in International Directory of Company Histories .
Boselovic, Len, "Tough Decisions Awaited Tyco's New CEO: Grove City's Breen," Pittsburgh Post-Gazette , November 16, 2003, http://post-gazette.com/pg/03320/240433.stm .
"Fiber-to-the-Home (FTTH) Council," Lightwave , October 2002, p. 96.
"Ed Breen: Biography," http://www.gcc.edu/news/biographies/breen/default.htm .
Kador, John, "Shall We Dance: Ed Breen Likes to Boogie While Chris Galvin Wants to Waltz," Electronic Business , February 2002, p. 56.
Symonds, William, "Tyco: The Vise Grows Ever-Tighter," BusinessWeek , October 7, 2002, p. 48.
Warner, Melanie, "Exorcism at Tyco," Fortune , April 28, 2003, p. 106.