Thomson Taps New Chair, CEO In Breton's Stead

PARIS— Thomson has named Charles Dehelly CEO and Frank E. Dangeard chairman, replacing Thierry Breton, who has resigned to become chairman of France Telecom.

The decision, formally approved at a shareholders' meeting here Oct. 8, was followed by approval of Breton to remain a member of the board and to chair the Strategic Committee.

The shareholders' meeting was called to approve the modification of Thomson's by-laws in order to separate the chairman and CEO jobs, as per the French New Business Regulations law, Thomson said.

Dehelly, who joined Thomson in 1998 and had been chief operating officer, will be in change of the implementation of strategies designed by the board and operational management. Four senior executive VPs will assist him: Al Arras, John Neville, Lanny Raimondo and Julian Waldron.

Dangeard, who had been vice-chairman, joined the board in 1999. As chairman he will drive activities of the board and will continue, with new management, to represent the company, particularly in front of shareholders and various different partners.

During September, Thomson reorganized its board, following the divestiture of Alcatel, NEC and DirecTV from the company's share capital. DirecTV chairman Eddy Hartenstein was invited to continue on the board in a personal capacity.

Thomson, which officially dropped "multimedia" from its name at the meeting, also announced that key priorities for the second half have not changed. Initiatives for the remainder of the year include pursuit of organic growth and integration synergies within the Digital Media solutions division, progress with the RCA Scenium product line and planning for next-generation products in the Consumer Products division.

Other Thomson priorities concern careful monitoring of restructuring in the Digital Media, Displays and Components and Consumer Products divisions, including broadband. The company expects to contain the set-top market decline through new clients already on board.

Thomson anticipates market conditions to remain tough into the fourth quarter, although some indicators — such as a low level of channel inventories — are positive, relative to a year ago. Cost-containment programs have been put in place throughout the Thomson divisions.

The company reported that the U.S. West Coast port closure has led to some increased costs and lost sales. However, the company reiterated its commitment to growth — about 20 percent in operating profit for the year and significant growth in net income.

At the same time as the meeting here, Thomson announced third-quarter consolidated sales.

Sales in the Consumer Products division — the company's largest — dropped 13.8 percent, including negative currency effects. Sales reached $1.2 billion in the three months, compared with $1.3 billion in the year ago period.

Broadband sales were down year-on-year by 25.1 percent, including currency movements. However, sales of televisions rose year-on-year on a constant currency basis. Scenium products sales in the United States led to a rise in U.S. high-end sales in September, the first full month of supply. Sales of audio, video and telephony hardware products were generally weak, with sales falling 10 percent year-on-year. Video products showed significant price declines in the United States at the end of the third quarter.

Third quarter revenue fell 7 percent in the Displays and Components division, including negative currency impact. Sales reached $345.2 million, down from $371.8 million in the same quarter in 2001. Revenue in optical components climbed 3 percent year over year, reflecting growth in excess of 30 percent year-on-year at mainstream optical components. Total tube sales fell 1.1 percent, compared with the third quarter last year, excluding currency changes. This reflected higher volumes and market shares in some categories, offset by lower prices.

Sales in the Patents and Licensing division dropped 12.1 percent, including foreign exchange, hitting $79.7 million in the third quarter, down from $91.5 million in the same quarter last year.