Chairman and chief executive officer, France Télécom
Born: January 15, 1955, in Paris, France.
Education: École Supérieure d'Électricité.
Family: Married (wife's name unknown); children: three.
Career: French school Lycee Francais in New York City, 1979–1981, teacher; Forma Systèmes, 1981–1986, chairman and CEO; French Ministry of Education and Research, 1986–1990, adviser; CGI Group, 1990–1993, CEO; Bull Group, 1993–, deputy managing director; Thomson Multimedia, 1997–2002, CEO; France Télécom, 2002–, CEO.
Publications: Softwar (with Denis Beneich), 1986; The Pentecost Project, 1987.
Address: France Télécom, 6 Place d'Alleray, 75505 Paris Cedex 15, France; http://www.francetelecom.com/en.
■ Over the course of his career Thierry Breton became known as a turnaround king. During the 1990s he rescued both the French computer-maker Bull and the consumer-electronics maker Thomson Multimedia from the brink of extinction. He orchestrated the two turnarounds through a combination of disciplined cost cutting and bold sales goals, persistently pressuring staff to meet his demands. Breton's biggest challenge came in 2002 when he became chief executive of France Télécom, Europe's second-largest phone company. At the time France Télécom was saddled with a $76 billion debt, which Breton drove down to just $53 billion over the course of 18 months. Known as a high-energy manager, Breton achieved results because he expected them; according to the Wall Street Journal , one of his favorite sayings was, "Anything but results is philosophy" (September 13, 2002).
Breton was somewhat of an anomaly in the corporate world: as a young man the curly-haired computer whiz failed
his entrance exams to the French grandes écoles , the country's best institutions of higher education. He instead attended the École Supérieure d'Électricité for engineering in Paris, going on to teach mathematics and information technology at a French high school in New York City from 1979 to 1981.
His first foray into the business world came in 1981, when he became chairman and chief executive officer of Forma Systèmes, a systems-analysis and software-engineering concern, for which he served until 1986. That year he took a position as an adviser with the French Ministry of Education and Research. From 1986 to 1990 Breton was also busy designing an open-air science and technology theme park in Paris called Futuroscope.
In 1990 Breton became the chief executive officer of CGI Group, a service-development company. He stayed until 1993, when the French government hired the computer genius to become deputy managing director of Bull Group, the troubled French computer maker. Breton's strategic restructuring delivered the company from the brink of bankruptcy and gave the young executive his first successful corporate recovery.
In 1997 Breton was named chairman and CEO of France's Thomson Multimedia, a government-owned consumer-electronics company that was on the verge of collapse. A year before Thomson had been in such a shambles that France's prime minister had tried to unload the company on the South Korea–based Daewoo for a single franc—yet had been unable to seal the deal.
Intent on turning things around, Breton decided to learn everything he could about the company, which sold televisions and VCRs under the Thomson, Kenwood, and RCA names. Instead of relying on managers to tell him about the operation and its products, Breton took his education upon himself: soon after his start Breton pulled on a red salesman's blazer, complete with his first name scrawled across the breast, and spent several days working under cover at Darty, a Paris-based electronics outlet. There Breton learned firsthand what customers thought of Thomson's products. He spent much of one day struggling to persuade a grandmother that her grandchildren's photographs would not tumble off the top of the slanted Thomson television set.
An aggressive CEO, Breton was not afraid to slash costs and face objections to his plans. After taking over at Thomson, Breton closed inefficient factories in Germany and the United States, moving production to Latin America and Eastern Europe, and slashed U.S. management ranks by 20 percent. He made stock offerings in order to generate cash and diversified the company's businesses, figuring that consumer-electronics products were not high-end enough to consistently earn profits over the long haul. Breton involved Thomson in interactive television, electronic publishing, and the Internet, as well as the higher-margin business of digital film-editing services. He also initiated a venture into an interactive version of TV Guide ; Thomson began manufacturing televisions with built-in software to run the electronic reference. Breton hoped the innovation would generate both subscriber and advertiser revenue.
Thomson's new ventures instilled investors with renewed confidence in the company and allowed Breton to lure bigname companies into buying stakes. Partners came to include Microsoft, Alcatel, NEC, and the DirecTV division of Hughes Electronics. By 1999 Thomson was turning a $230 million profit on sales of $6.5 billion. By the time Breton left in 2002, revenues had increased by more than 80 percent and Thomson was outperforming Sony, Matsushita, and Philips, its major consumer-electronics competitors.
Some industry analysts believed that Breton received too much credit for the Thomson turnaround, saying the company's recovery had more to do with agreements made before Breton had come on board. For instance, when Thomson bought RCA from General Electric in 1988, the French company agreed to let General Electric keep RCA's patents for 10 years as part of the purchase agreement. Thomson began reaping patent revenues in 1999; in 2001 patents and licensing earnings generated EUR 398.8 million for the company. Breton dismissed the theory, saying the company's recovery had been under way well before patent revenues started coming in. Others criticized Breton for the problems the computer-maker Bull Group ran into during the early 2000s, suggesting that the troubles stemmed from Breton's earlier tenure.
In 2002 the French government called upon Breton again, this time to rescue France Télécom. At the time the firm's $76 billion debt burden was so great that all of its cash was being eaten up simply to pay interest payments, with nothing left over to reduce the principals on its loans. The company was carrying one of the largest debt loads in the world.
Within weeks of Breton's takeover, investors demonstrated their faith in the new leader by driving stock prices up to double the rock-bottom low. The French finance ministry's level of trust was evident in the code name Breton was given during hiring negotiations: "Mister Cash."
The task of turning the company around was formidable, but Breton's peers—and former rivals—anticipated success. The Sony chairman Nobuyuki Idei told the Wall Street Journal , "Thierry Breton is a brilliant person who took a nearly bankrupt company and turned it around. We have a lot of respect for him" (July 16, 2002).
Known for his youthful energy, Breton wasted no time in formulating a strategy. He took over on October 2, 2002, and gave himself a December 2 deadline for having a plan in place. Over the last weekend in October Breton asked the company's executives to hand over documents explaining their portions of the business. He also asked them to include examinations of their successes and failures. Breton took the piles of papers and headed into seclusion at a Paris hotel in order to study them; he had done the same thing five years before after taking over Thomson. Besides his own investigation, Breton put together a team of 120 consultants and advisers to conduct internal audits. He was aided by teams from Ernst & Young, Deloitte, Sullivan & Cromwell, and McKinsey and Bain. After 45 days the team produced a 1,500-page report.
Breton was determined to have a firsthand say about who would help him run the company—rather than relying on top managers to make such decisions. Breton spent his first two months speaking to up-and-coming managers over long breakfast meetings; he relied on his instincts in picking some of those managers to be appointed to top posts.
Just two months after taking over, Breton delivered his rescue plan to France Télécom's board of directors. Through his and others' studies, Breton generated a three-tiered plan that called for cutting costs to increase cash flow, refinancing debt, and generating $16 billion from shareholders through a capital increase, all in efforts to save $30 billion over three years. At the time of Breton's takeover some of France Télécom's ventures, such as Orange wireless and Wanadoo Internet, were operating on their own; Breton brought them back into the fold of the parent company, saving management costs and allowing him a more direct say with regard to their operations.
Breton was eager to start implementing his plan and was serious about showing his managers that he meant business. As soon as France Télécom's board gave him approval, Breton put out a message to the company's 50 top managers asking them to immediately join a conference call—it was eleven o'clock at night in Paris, and Breton wanted to prep managers to start executing his plan the very next morning. He characteristically made his managers feel challenged rather than comfortable.
Another trademark of Breton's management was extreme demands for accountability. At both Thomson and France Télécom he set up a system to review the performances of top managers every six months instead of annually; he connected their compensation to their meeting of his performance targets.
After only 18 months on the job at France Télécom, business was looking up. In that span of time Breton increased 2003 revenues 3.4 percent over the previous year to $58 billion, chiefly on gains in wireless and broadband Internet technologies. He boosted 2003 operating income to $12 billion—a 45 percent increase—through tighter financial controls and cost cutting. The company's $76 billion debt fell to $53 billion.
Breton's vision for France Télécom also relied on diversification of the company's services. Breton hoped that technical innovations would bump his company ahead of the pack, which was evident in the fact that his first excursion as CEO was to France Télécom's research and development laboratories. In 2003 Breton told BusinessWeek that while high-speed Internet and mobile service were growing sectors of the business, France Télécom could not rely on those technologies alone: "For the future, we don't know what technologies will be the most important. That means you can't just bet on one technology" (February 11, 2003).
An avowed technology junkie, Breton also told BusinessWeek that he adored technology and always tried out the lab's latest developments in his own home. At the end of 2003 France Télécom rolled out "wi-fi" (wireless fidelity) kits that allowed customers to hook up wireless networks in their homes; naturally Breton personally tested the technology first.
Breton also had a vision to merge his company's traditional phone service with its wireless and Internet networks, creating one integrated service that would let people communicate without considering which medium they were using. The uni-fication would eliminate the need for different phone numbers for wired and mobile services. Breton told BusinessWeek , "Customers don't care about the network. They just want services" (June 7, 2004).
Besides having respect in the corporate world, Breton also earned a reputation in the science-fiction world during the 1980s when he wrote a few books. One of his most popular titles was Softwar , which he coauthored with Denis Beneich. Originally written in French, the book was translated into English in 1986. Softwar was a Cold War thriller, its plot revolving around the very real conflict between the former Soviet Union and the United States during that time period. In the story the Soviets attempt to buy a supercomputer for military use. The sale is negotiated through France, since the United States would never have been able to sell a computer directly to the Soviets.
The United States then sends a computer scientist to Paris to booby-trap the computer by saddling it with programs called "softbombs," which could be set off from the outside. These softbombs could freeze up the computer or have a variety of other effects on its operations. Parts of the book were highly technical and demonstrated Breton's vast knowledge of computer programming. He followed Softwar with 1987's The Pentecost Project , a tale about a secret global-communications network overseen by the Vatican.
See also entries on France Télécom Group and THOMSON Multimedia S.A. in International Directory of Company Histories .
Ascarelli, Silvia, Almar Latour, and Kevin J. Delaney, "Leading the News: French Government Backs Breton to Take Top France Télécom Post," Wall Street Journal , September 13, 2002.
Bryan-Low, Cassell, "With Debt Down, France Télécom Aims to Separate Itself from Rivals: One-Stop Shopping Is Seen as Critical to Firm's Success, but Can It Deliver on Price?" Wall Street Journal , June 10, 2004.
Delaney, Kevin J., "A Rare Success Story in a Business Rife with Woes—CEO of French Company that Makes Electronics Manages a Quick Rebirth," Wall Street Journal , July 16, 2002.
——, "New CEO Tackles France Télécom's Woes," Wall Street Journal , December 18, 2002.
Lanchner, David, "Calling Up 'Mister Cash,'" Institutional Investor , January 2004, p. 63.
Matlack, Carol, and Andy Reinhardt, "Vive la Telecom?" BusinessWeek , February 17, 2003, p. 26.
"Thierry Breton," BusinessWeek , June 7, 2004.
"Thierry Breton," BusinessWeek Online , February 11, 2003, http://www.businessweek.com/technology/content/feb2003/tc20030211_1251_tc070.htm .
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