Edward D. Breen is the necessary man in corporate Philadelphia.
The New Hope resident is lead director at media giant Comcast Corp., which is an old customer from his youth when he was selling cable antennas. He is chairman of Tyco Inc., the Princeton conglomerate he rescued from bankruptcy and carved into five public companies.
And as of Monday, in what could be his biggest challenge yet, Breen became chairman and chief executive of the venerable DuPont Co., where as interim CEO he had already been freezing projects, combining units, and weighing asset sales, in hopes of boosting profits.
Breen, 59, was recruited to DuPont's board just last spring, as then-CEO Ellen Kullman was fighting off a nasty board election challenge from billionaire raider Nelson Peltz. When Kullman quit in October, Breen's colleagues chose him as interim boss.
Breen moved fast. He met with DuPont's R&D and business group leaders, folded four groups into two, and froze Kullman's "One DuPont" IT upgrade program, sending hundreds of contractors packing two months before its debut. As rumors spread that DuPont was weighing a merger of pesticide operations with Dow, Syngenta, or Philadelphia-based FMC, Breen confirmed that "everyone is talking to everyone."
Some investors and DuPonters expect that Breen will do to DuPont what he did to Tyco, where, by Breen's count, he fired 290 of 300 top managers hired by disgraced predecessor Dennis Kozlowski. Then, over a decade, Breen spun off the likes of ADT alarms, TE Connectivity switches and sensors, and Covidien medical supplies into separate firms, raising billions for investors while shutting dozens of plants and leaving thousands out of work.
But "DuPont is different," Breen told shareholders at the firm's Oct. 27 quarterly conference call.
Maybe, he said, DuPont will be more like General Instrument, which Breen also ran, shutting old business units and cutting a blockbuster deal to move his TV-industry customers into the Internet age. He tripled revenues and boosted the share price until Breen sold it to Motorola for $17 billion in 2000.
Breen, who has homes in New Hope (where he is an investor in the $25 million Riverhouse at Odette's project), Stone Harbor (where he co-owns the Reeds at Shelter Haven hotel), and Center City, said he's been visiting DuPont operations daily since taking over.
Instead of cutting R&D or DuPont's global sales force, which he praised, Breen said he was more likely to trim administrative and financial costs at the Wilmington headquarters. "There's ways to strategically reduce," he said, promising a plan this year.
Eric Pillmore was Breen's chief financial officer at General Instrument, his chief ethics officer at Tyco, and recently a consultant to a big DuPont shareholder on Breen's ability to handle the CEO job. He says Breen prefers to work without pricey consultants. "He relies pretty heavily on the insight of the current investor base," Pillmore said. "He believes people who have money in the company have a more sincere interest in taking the right actions long-term."
"He'll spend a fair amount of time assessing the leadership in the companies."
Pillmore summed up Breen's approach: "Let's be decisive, and if we get things right 80 percent of the time, we can clean up the other 20 percent. Let's not procrastinate on the biggest decision."
He can be decisive in private decisions, too, says painter Scott Cameron. In 2013, Breen spied Cameron's painting of the three-masted steamship S.S. Philadelphia in a Center City gallery window, listed for $15,000. "He walked by, saw it, went into the gallery, and bought it. No dickering," Cameron recalls.
Mentors such as cable mogul John Malone say Breen exhibits a rare combination of business savvy and people skills that helps him sell disruptive changes.
Breen's father, a manager at the old Continental Can in Philadelphia, moved the family to Bucks County, where Breen wrestled for Council Rock High School. He headed to Grove City College, a socially conservative school in northwestern Pennsylvania that was a favorite philanthropy of the Pew family when they ran Sunoco. His wife is also a "Grover" (they have three grown children; he's a Grove City trustee).
Breen came home in 1978 to work as a salesman for Jerrold Electronics, the cable TV supplier whose founder, Milton Jerrold Shapp, was Pennsylvania's governor in the 1970s. It later became the chief business line for a larger company, General Instrument Corp.
As a salesman, Breen moved in with his customers, the better to know their needs. When he called on Harold F. "Gerry" Lenfest's cable-TV operation at his home office, "he brought over a little aquarium for the kids," buying time to talk business with dad, recalled Lenfest, who now owns The Inquirer.
"He's a natural customer person," and a magnet to his peers, says Thomas Lynch, a General Instrument veteran who moved the family to California at Breen's behest to fix a troubled unit and was later rewarded when Breen tapped him as CEO for TE Connectivity. "He'd get our families together to play baseball," turn double plays, and then talk business over a glass of white wine - nothing fancy - at a Bucks County country tavern near home.
"Ed is decisive, but he's not rash. He lets things bake. He's very good at identifying the handful of issues. He taught us to know the strengths of the company and build around them. And not to delude ourselves. Don't make it too complicated," Lynch added.
Under Donald Rumsfeld, later the U.S. secretary of defense who led the invasion of Iraq, General Instrument began to prepare for the transition from old-fashioned cable TV to digital systems that could support hundreds of channels and the Internet.
Big change for cable
GI's crisis came in 1997, when Breen took over as chief executive, at a time when the federal cable TV law of 1996 had opened the door to digital and Internet service. But cable companies and suppliers alike were nervous at the cost of such a big change.
Breen moved fast to cut other costs and focus on the opportunity. Recalls Pillmore: "Less than 48 hours after he took the job, he told me, 'Go to Chicago and notify the corporate team there that the Chicago office will be closing.' " After axing the corporate finance team, Breen gave its work to the divisional finance group in Horsham. One less layer.
Around that time, John Malone, chief of what was then the largest cable firm, Tele-Communications Inc., headed a group of executives seeking ways to get the new digital cable boxes built affordably.
Scientific Atlanta, a leading TV parts supplier, said it couldn't make digital boxes for less than $800.
In Seattle, Microsoft chief Bill Gates promised a $300 box, but demanded a fat cut of cable ads.
Jon Scully's Apple wouldn't agree to a price. And Sun Microsystems declared an impasse over memory capacity.
"I picked up the phone and called Ed Breen," recalled Malone. After a week, Breen promised a $300 box - if cable companies guaranteed 10 million orders. The $3 billion deal would triple GI sales.
Malone was pleased, but set his own condition: GI stock warrants that would enrich the cable firms if shares rose. Breen considered it, agreed, and GI shares shot so high that the cable firms collected more profits than they had paid for the digital boxes: "We got 10 million boxes for free," Malone crowed.
How did Breen and his Horsham factory outwit the tech elites? "Ed made it practical when everyone else was making too big a deal about it," said Malone, who chairs the Liberty media companies, which include the QVC shopping network in West Chester. "The others were trying to cram their view of software into a new device, a new application. Ed started with a clean sheet of paper, and he got it done. He's the kind of guy that doesn't waste a lot of energy talking."
To his managers, Breen said, "This industry is going to a thousand channels. We're going to be the leader in providing the technology. We'll cannibalize our analog business in the process, and move ahead," Pillmore recalled.
Breen is decisive, but also deliberate, says Wharton management professor Mike Useem, who advised him on the Tyco board.
"He's no Al Dunlap," the former Scott Paper chairman, who cultivated a reputation for near-reckless speed in cuts, Useem said.
At Tyco, Breen's team hired new managers and tried to convince investors that it was a new day. Shares rose, but not fast enough. Meanwhile, health stocks were taking off. Breen decided to spin off Tyco Healthcare into a new firm, Covidien. One deal led to more. Breen had "worried about cash flow and hitting the numbers. We found, once you start hitting those numbers, they start believing in your story," Pillmore said.
"You notice when they broke up Tyco, twice, it took a couple of years," Useem said. He predicted Breen will take "six months or longer" to see whether DuPont's units make more money together or apart.
He will be looking for "crossover, cross-selling, cross-marketing," Useem said. "Ed can see the changes in the market before other people."