Experts split on Tyco image

Tyco International Ltd. isn't the same company it was two years ago.

Gone are the executives who were on trial: Chief executive L. Dennis Kozlowski was fired in 2002, and finance chief Mark H. Swartz left the firm in August 2002. The far-flung conglomerate also replaced its board of directors and most of its top management. It even moved its US headquarters to West Windsor, N.J., from Exeter, N.H.

Under new chairman and chief executive Ed Breen, Tyco shares have tripled from their low in 2002, and the company swung to a profit in its fiscal 2003 from a loss the year before. Yesterday, Tyco shares didn't even react after a New York state judge declared a mistrial in the case. But how far can Tyco separate itself from the fate of Kozlowski and Swartz and the images of excess, exemplified by a $6,000 shower curtain?

A mistrial only means the allegations against its former executives will continue to make headlines as both sides prepare for a new trial. Some media and marketing specialists say no matter what happens Tyco's name will remain tainted.

"Think of the word 'Valdez,' " said Stephen A. Greyser, a professor of corporate communications at Harvard Business School. "It still brings to mind Exxon."

With Tyco, one of the enduring memories could be a video shown to jurors of a lavish 2001 birthday party in Sardinia for Kozlowski's wife. Tyco picked up $1 million of the cost, according to prosecutors. "Kozlowski has been so closely identified with Tyco, and with the video of the birthday party in Italy, there's very little that can be done to separate the two, regardless of guilt," said Harry King, a Boston consultant specializing in crisis communications.

New York state prosecutors alleged that Kozlowski, 57, and Swartz, 43, looted Tyco of hundreds of millions of dollars. The pair faced 32 counts, ranging from grand larceny to securities fraud. The judge declared a mistrial on the 12th day of deliberation after one juror received a threatening letter. Prosecutors said they plan to retry the case.

Still, Tyco has certain advantages as it seeks to distance itself from its former executives. The company mostly conducted business under the names of its numerous divisions. Moreover, much of its sales involve products being sold to other firms, not to consumers. Business buyers may not factor the trial into their buying decisions as directly as consumers. Though it has been in the spotlight for two years, Tyco the conglomerate is still confused with Tyco the toy car company by some people.

"When it comes to perception and recognition, Tyco is much lower down on the public radar than most," said Tobe Berkovitz, associate dean at Boston University's College of Communication. "They have a chance of coming back because they didn't have that far to fall in terms of public image in the first place."

The most obvious comparison is Martha Stewart, the former head of Martha Stewart Living Omnimedia Inc., who was convicted March 5 on four charges related to trading a stock on insider information. The home fashion icon not only lent her name to her company, she was also its public face, chief executive, and creative force.

Tyco, by contrast, was always faceless. The company started in 1960 in Waltham as an investment company but its growth accelerated when Kozlowski took over in 1992. Under him, Tyco completed hundreds of acquisitions of companies that make everything from electronic components to pipes.

Tyco has never sought to tie together its dozens of brands under its corporate banner. For example, homeowners who sign up with its ADT home-security business may not know they're doing business with Tyco. The same goes for businesses that buy valves from Grinnell or electronic connectors from Amp, both Tyco companies.

"The corporate brand isn't in as strong a position to taint the individual brands," said Kathleen Seiders, associate professor of marketing at Boston College. "They're buffered because of the way the company is structured. Martha Stewart was in the worst position possible."

So far, the most visible effort to rehabilitate its image under new chief Breen is an advertising campaign. Created by Boston agency Hill Holliday Connors Cosmopulos Inc., the ads began running last fall in major newspapers and business magazines. One advertisement promotes the achievements of Tyco employees. In another, the new executive team assembled by Breen is pictured together under a headline that reads: "We signed on because we believe Tyco has a bright future. We signed below to show we mean it." The signatures of each of the executives, including Breen, appear at the bottom of the ad.

"It's a very visible way of letting people know that things are different; there's new management here; there are people who are highly credible and who came from well-run organizations and are now here at Tyco and believe there's potential for the future," said spokeswoman Gwen Fisher. She declined to say how much the company is spending on the ads, citing competitive reasons.

Still, there are dangers to the type of buffing and polishing Tyco is attempting.

Rich Rico, co-founder of Via Group, a Portland, Maine, marketing communications agency, said feel-good ads can backfire if the company can't deliver on basics like products and customer service. "If you don't have a good experience when you're dealing with the company, the advertising will be seen as pandering," he said.

Jeffrey Krasner can be reached at krasner@globe.com.