Parties are great, so long as you don't have to clean up the next day. As for Tyco (NYSE:TYC), that unenviable job is on the shoulders of Edward Breen, who took over as CEO when Dennis Kozlowski departed in July 2002. Then again, Breen stands to make a pile of money from his 7.3 million stock options and 1.3 million deferred share units.

Actually, he is carrying out his role with the efficiency and leadership of, well, Julius Caesar. The company sustained a fourth quarter loss of $297.1 million or $0.15 a share, which compares to a whopping loss of $1.4 billion, or $0.72 a share, in the same period last year.

More importantly, Breen is ginning-up old-fashioned free cash flow -- $1.4 billion in the past quarter, compared to $900 million a year earlier. Of course, the beauty of free cash flow is that it allows the company to do such things as buy back shares and increase dividends (in the old days, it was a nice way to have extravagant parties). Although, expect the company to use its available cash to pay down its still lofty debt levels so as to improve the credit rating (the debt-to-equity ratio is 44.3%).

The original vision of Tyco was to become another General Electric (NYSE:GE). Well, Breen is taking a more pragmatic approach. He has reformed corporate governance (the first step was getting rid of the board), cut costs, streamlined operations, and added new management practices, such as Six Sigma.

He is also building a foundation for the long term. This means a "restructuring" and, yes, throwing 7,200 workers to the lions (the company has about 270,000 employees). Tyco also plans to exit over 50 businesses that have combined revenues of $2.1 billion. It's part of a simple, yet effective analysis of each division in terms of "strategic fit or financial return."

As is the case with many companies when dealing with Wall Street, Tyco seems to be overly conservative with its guidance (after all, analysts were expecting $800 million in cash flow last quarter, not the reported $1.4 billion). And investors seem to think so as well, giving the stock a nice boost on the earnings news.

Tom Taulli is the author of six books on investing, including Investing in IPOs (Bloomberg Press), as well as a professor of finance at the USC School of Business (don't worry, he does come out of his ivory tower). You can reach him at tom@taulli.com.