Business A La Carte

Tweet

True to his own analysis, Auricoste has moved beyond software applications, which accounted for more than half of Eurosoft's last year's pretax revenues of roughly $15 million, into such new areas as robotics, microcomputer software, and dedicated micro systems.

At the moment, software sales and service are the one flourishing oasis in the desert of French microelectronics. France leads the field in Europe, and, last year, despite a recession that crippled many industries, companies like Line Data and Eurosoft showed strong growth. The future, however, presents a somewhat less agreeable prospect -- at least in the rapidly expanding market for personal computer software. Here, sooner or later, France will have to suffer for the profound weaknesses of its hardware industry. Philippe Sahut d'lzarn, formerly with the Ministry of Research and Industry in the Giscard administration and now an adviser on high technology to Banque Nationale de Paris, puts the problem this way: "Our software firms have been built without external capital, with a minimum of risk. They tend to rely on large clients who pay every month. With the coming of the microcomputer, however, there will be a much larger customer base, and more risk. Software is now becoming more of an industry than a service, and the French firms are slow to react to this. That's why most of the software for micros here will be American."

So, very likely, will the micros. Bull's follow-the-leader strategy has left it hopelessly behind not only the leader, IBM, but the smaller U.S. and Japanese companies as well. In the private entrepreneurial sector there is a company, Leanord of Lille, that manufactures a line of microcomputers. But the recent history of this company has not been encouraging. Unable to raise growth-capital from France's conservative banks and stock market, Leanord's president and founder Bernard Pronier took the desperate step, in 1976, of selling his company to Creusot-Loire, a major manufacturer of heavy industrial machinery and specialty steel. His intention, of course, was to tap the larger company's capital resources. The scheme backfired The computer company did just fine: Last year's $10 million in sales showed a substantial profit. The parent company, however, has been nearly pauperized by the recession, and it is now less of a resource than a liability for Leanord.

"They are restricting our growth, so I am trying to find 10 to 15 people to invest and let us go independent again," Pronier said recently in Lille, an industrial city near Belgium. "If this were America, I believe that with our product we would have stayed independent, gone public by now, and be exporting around the world. But we just can't get the money."

Far from despairing, however, Proniet has taken heart from recent moves by the Mitterrand government to encourage the entrepreneurial sector. The Ministry of Education, for example, has ordered nearly 4,000 Leanord computers -- a dramatic departure from the usual procedure of favoring government-owned companies like Bull. This must be personally gratifying to Pronier; but Socialist policy has aimed at structural changes, too. Bernard Attali, a leading Socialist intellectual and head of France's powerful regional development agency, DATAR, said not long ago: "We face a crisis now in France -- 9% unemployment and a lagging growth rate -- and we are very pragmatic to find solutions. For years we have lived in an environment in which all decisions were made in Paris. We put too much stress on large companies. But France is a diverse nation of thousands of smaller businesses, and we want to give them a responsibility."

In line with this aim, the government has taken remarkably bold steps to free a once dismally timid venture capital market. It has fostered a secondary market in over-the-counter stocks. It has gone so far as to grant three-year corporate tax exemptions for newly formed independent companies. Even the nationalizations have been useful here: With fewer grandes affaires available, investors have been obliged to look elsewhere for new growth companies on which to stake their money. lean Fonteneau, vice-president of international operations at Soffinova, France's oldest and biggest venture capital firm, has said, "I think this government is sincere in wanting to help the small companies." It seems that other investors would agree. The annual flow of venture capital has doubled over the past three years to $37.5 million.

But if the Socialists' intentions for the entrepreneurial sector are good, some of their practices could be decidedly counterproductive. This past summer Mitterrand promised to reduce taxes, individual and corporate, beginning in 1985, from 44.8% of the national income eventually to 42%. He has also begun to show signs of a "free marketer's resistence to bailing out some of the country's sick giants. Nevertheless, in recent years, marginal taxes for people in the upper-middle-income brackets have been increased from 60% to 65%, with a 5% or 8% surcharge (depending on the amount of taxes due) added on for good measure. There is also a stiff new wealth tax on people with assets exceeding $400,000. Many American entrepreneurs would argue that this is hardly the way to seduce Frenchmen to emulate the exploits of a William Gates of Microsoft Corp. or a Steven Jobs of Apple Computer.

Socialist intellectuals like Attali naturally take a different view. "I strongly believe that there are many kinds of motivation besides money," Attali says, rather hotly. "The sense of belonging to an enterprise, the challenge of success. There are. such things as pride and honor that motivate men."

In men like Pierre Costa-Marini, however, such appeals to la gloire are no more heart-stirring than offers of government help. "We don't even want the government to encourage us," the 55-year-old businessman said, as night fell over Courbevoie. "To me, getting money from the government is like getting money from the devil. Once you start begging, you're always begging. All we want is to be left alone. We want freedom -- it boils down to this -- to do our business."

 PREV  1 | 2 | 3