Gored Bull

Though it took its ungallic name from a Norwegian engineer, Compagnie des Machines Bull is as French as la gloire and pommes frites. The French fairly burst with pride when, using scientific skill and superb marketing, Machines Bull in the last decade briefly challenged giant IBM with its excellent small and efficient computers. Today Machines Bull is slipping toward bankruptcy--but pride has not been lost. Last week the French government blocked an offer by General Electric to buy up 20% of Machines Bull stock for a reported $40 million. Saving the company, said Finance Minister Valery Giscard d'Estaing, would require "a purely French solution."

Overly Ambitious. Machines Bull fell on hard times essentially because it used 19th century management methods to turn out 20th century products. The company's creme de la creme engineers seized eagerly on technological advances (such as faster-access magnetic memory drums and germanium diodes to replace standard tubes). Machines Bull's CMC? system of magnetically coded bank checks was declared superior to a competing U.S. code and got the approval of European banks. The company's sales increased from $7,000,000 in 1952 to $69 million in 1962, and Machines Bull exported to 40 countries.

But President Joseph Callies and his staff were not prepared for the high cost and complexities of computer making. In an overly ambitious decision, Machines Bull jumped from making small units directly to producing the Gamma 60, a costly ($1,000,000 to $3,000,000) marvel that can calculate missile trajectories and turn out a 300,000-man payroll simultaneously. To compete in the intermediate-computer range, Machines Bull distributed RCA models with scant profit. With 80% of its output rented instead of sold, the company gradually discovered that it was not receiving income enough to amortize its nine plants. Machines Bull stepped up its borrowing, cut back on research, and chopped prices. The downward spiral had begun.

No Suitors. In a desperate effort to stop the spiral, bankers moved to direct a financial reorganization, and the government sent an engineer into the director general's office to supervise operations. But Callies held defiantly on as president, proposed that G.E. be allowed to buy into Machines Bull. Now that Callies has been rebuffed, the government may have some difficulty arranging its own solution. It wants to marry Machines Bull to such other French electronics firms as Compagnie Generale de Telegraphic Sans Fil, Compagnie Francaise Thomson-Houston, and Compagnie Generale d'Electricite, but none of these is anxious to wed a loser. The government, which has covered Machines Bull's obligations for December and January, may have to make the dowry more attractive.

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