There were no flowery toasts when Edward Breen greeted his new boss, Motorola Inc. CEO Christopher Galvin, on the day Motorola bought Breen’s General Instrument Corp.
Breen chose a more telling gesture.
By the time Galvin’s limousine pulled up at a country club near GI’s Philadelphia-area headquarters to celebrate the deal’s closing, Breen had replaced GI’s name on its red brick offices with Motorola’s sky blue-and-white flag.
His message was clear: Breen moves fast, and he rarely disappoints.
His ascent at his new employer was equally quick. Installed now, 2 1/2 years later, in an office next to Galvin’s on Motorola’s sprawling Schaumburg headquarters campus, the 46-year-old president and chief operating officer is viewed by Wall Street as the best hope for a turnaround at the struggling maker of cell phones and chips.
His unsentimental eye for the bottom line and his plain talk–“This company has to make money, and it has to make money quick,” Breen told shareholders in May–contrasts sharply with Galvin’s more circumspect style.
“He’s very direct about the need for cuts, and that’s a welcome change of pace,” says J.P. Morgan senior analyst Edward Snyder.
Yet even a corporate soothsayer would have had a hard time foreseeing Breen’s career.
From a modest background, a star salesman with a degree from a little-known college worked 21 years at a single company in the clubby cable industry before landing the No. 2 job at one of the world’s biggest companies, where he is the heir apparent to the founder’s blue-blood grandson.
His rise is proof that corporate meritocracy is alive and well, and that Breen brings a leadership style Motorola sorely needs.
The company is trying to hack its way to profitability amid one of the high-tech industry’s worst downturns ever. At the same time, it faces tough strategic choices about whether to sell or merge one or more of its largest businesses.
Although Breen is well-schooled for the job of making Motorola more efficient, he’s largely untested for the position for which he’s being groomed: articulating the vision at a company known for pioneering huge new markets like car radios and cell phones.
“What Motorola certainly needs now is someone to cut the daylights out of it,” says an industry CEO who admires Breen. “Ed can do that. But will that move Motorola into the right technology? At the end of the day, no.”
Neither Breen nor Galvin were available for an interview. Corporate spokeswoman Jennifer Weyrauch said their main focus is “the restructuring and revitalization of the company.”
Interviews with people who know Breen paint a picture of a down-to-earth guy who impresses people with his business smarts without threatening them. Some say he benefited from his experience at a smaller company that went through multiple restructurings including a leveraged buyout.
“Lots of people in big companies have tunnel vision,” says executive recruiter Peter Crist. “Breen sees a bigger playing field.”
A Philadelphia native whose father was a corporate sales executive, he spent summers working at a campground his parents founded.
At Grove City College, a Christian-oriented college in western Pennsylvania, he was a varsity wrestler and president of social fraternity Beta Sigma, graduating cum laude with a double major: business administration and economics.
He married his college sweetheart, Lynn, who took charge of sending her fiance’s resume to hundreds of companies including a small cable TV equipment maker, Jerrold Communications, a division of GI.
Breen spent 10 years at the tight-knit unit where “you had fun but you always hit your numbers,” says former GI executive James Faust.
Young salesman stood out
“Sometimes a guy just shines, and he shined,” says former boss Hal Krisbergh, CEO of WorldGate Communications Inc., who promoted Breen over more senior employees.
At Jerrold, financial controls were as important as closing sales.
If the division needed a 15 percent expense cut to meet its numbers, Breen listened to employees telling him why it couldn’t be done. Then he’d say, “The number is 15 percent.”
At Motorola, Breen is getting much of the credit for the company’s massive cost-cutting, even though many measures were under way before he was named chief operating officer last fall, effective in January.
Motorola, faced with simultaneous downturns in three of its biggest businesses–cell phones, wireless networking gear and semiconductors–has been closing factories, outsourcing operations and shutting or selling business units.
More cuts are expected as early as next week in the networking gear business.
By the end of the year, Motorola expects to employ about 100,000 worldwide, down nearly one-third from a peak of 150,000 in 2000.
Though Breen is not the sole architect of the changes, he brings an outsider’s eye. “He came to Motorola and he just saw fat … tons of overhead you could slash,” says another former GI executive.
Breen learned more than cost cutting at GI. One reason for his promotion to GI’s corporate ranks after 10 years at Jerrold was his success with customers.
Cable operators liked him because he made sure GI delivered on its promises, industry insiders say. At the same time, Breen was good at motivating GI’s sales team.
“It’s time to collect the rent here,” former colleagues recall him saying.
His most important deal came in late 1997.
GI, based then in Chicago, had split into three public companies. Breen was CEO at the biggest, a $1.8 billion-in-sales cable equipment-maker briefly named NextLevel Communications until Breen restored the GI name.
GI’s stock was languishing. It had missed financial targets and it was unclear when its steep investment in leading-edge digital set-top boxes would pay off.
Breen was working on a solution.
“Ed realized we were being driven by the technocrats rather than the business people,” says his friend and mentor Frank Drendel, CEO of CommScope Inc. in North Carolina, one of the three companies in GI’s split.
Breen negotiated a deal with John Malone, then Tele-Communications Inc.’s chairman, to get the industry moving again.
Malone led a consortium of the biggest cable operators to place a $4.5 billion order for GI’s digital set-top boxes. In turn, GI bought TCI’s digital programming distribution service and made it an industry service.
As an added incentive, Breen offered the cable operators stock warrants for every order above a minimum level.
NextLevel/GI’s stock popped up 18 percent within hours after the blockbuster deal was announced in December 1997, cementing the company’s lead over arch-rival Scientific-Atlanta.
“The long-awaited digital corner has at last been turned,” declared trade magazine Electronic Media, albeit prematurely.
Moves made quickly
Breen worked fast, moving the company’s headquarters back to Pennsylvania, cutting jobs from a money-losing group and promoting the industry’s broadband agenda.
When Motorola came calling two years later with its powerful brand and resources, Galvin and Breen hit it off, according to Drendel.
“We all said, `The problem with mergers is, they never work,'” recalls Drendel. “But they both saw the vision … and the [cable] industry loved the Motorola name.”
GI’s shareholders, including Breen, were richly rewarded in the deal, which closed in January 2000.
Many expected Breen to complete the merger and move on. Instead, he integrated the two companies’ cable businesses in record time–three months–and stayed.
Rewards reaped
Certainly, Motorola’s board and Galvin are working hard to keep him. In addition to rapid promotions, he received a $3.6 million bonus in 2000 including $2.6 million for completing the integration in half his allotted time.
Though none of Motorola’s top officers got bonuses in 2001, when Motorola reported its first annual operating loss since the Depression, Breen got restricted stock valued at $10.3 million to sweeten his $733,654 salary. Galvin’s stock award was only slightly larger at $13.2 million.
Wall Street, too, is impressed with Breen. “You’ve seen some very uncharacteristic decision-making,” says Morningstar analyst Todd Bernier, who credits him with making good decisions quickly.
Still, others suggest that Breen’s honeymoon with Wall Street will end abruptly if Motorola’s long-awaited turnaround doesn’t materialize by next year.
Analysts see signs of a recovery in Motorola’s cellular phone business, but more tough decisions loom for its networking equipment and semiconductor businesses.
“The hardest choice is deciding whether they want to sacrifice diversification for growth” that comes with focus, says J.P. Morgan’s Snyder.
First things first.
Breen will be happy when all Motorola’s businesses are making money again.
– – –
Breen’s path to Motorola
Edward Breen succeeded Robert Growney as president and chief operating officer of Motorola Inc. in January. Breen began his career at General Instrument Corp., which merged with Motorola in January 2000. A look at major posts he has held:
PROFESSIONAL
GENERAL INSTRUMENT CORP.
1988 to 1994
Senior vice president of sales
Oversaw employees and activities in the U.S., Canada, Latin America, Europe and Asia.
1994 to 1996
Executive vice president
Non-satellite cable services and products area
1996-1997
President
Broadband networks group
1997-2000
Chairman, president and chief executive officer of General Instrument Corp.
MOTOROLA INC.
January 2000 to January 2001
President
Broadband communications sector
January 2001 to January 2002
Executive vice president and president
Networks sector
January 2002 to present
President and chief operating officer
Motorola Inc.
PERSONAL
Education: Grove City College, Grove City, Pa.
Bachelor’s degree in business administration and economics
Family: Married, three children.
Chicago Tribune.
