Dec 17, 2003 12:00 PM

Motorola announced yesterday the appointment of Edward J. Zander as chairman and CEO, replacing Christopher Galvin. The company also said Mike Zafirovski would remain as president and chief operating officer.

Zander comes to Motorola from Silver Lake Partners, where he served as managing director of the private equity fund that focuses on technology industries. Prior to that experience, Zander served as president and chief operating officer at Sun Microsystems until June 2002. During his tenure, Sun’s annual revenues grew to $18 billion.

The appointment caught some observers by surprise, as it appeared Zafirovski was being groomed to replace Galvin, who announced his retirement in September. Moreover, Zafirovski had gained the support and loyalty of employees since taking his current post in July 2002.

“I’m a little surprised,” said John Jackson, analyst with The Yankee Group. “Given the reverence that Zafirovski appeared to have from the rank and file, he seemed the logical choice to succeed Galvin.”

In retrospect, however, the lengthy search process offered a hint that the company would look beyond Zafirovski, Jackson said. “The fact that this dragged on for as long as it did indicated that Zafirovski perhaps wasn’t the shoo-in that people thought.”

The fact that Zafirovski has been with the company just three-and-a-half years likely hurt him in the eyes of the directors, Jackson said. Zafirovski joined Motorola in June 2000 to lead Motorola’s personal communications sector, its largest business segment.

“He’s been in his current position just a year and a half, and that lack of tenure might have hurt him. It was probably a timing issue,” Jackson said.

According to Jackson, Wall Street had been pressuring Motorola to conclude its search. “Wall Street would not have tolerated any additional delay,” Jackson said. “If this had dragged out after the first of the year, it would have been an issue.”

The markets reacted well to the announcement, as Motorola’s stock price rose 4% to $13.33 at the close of trading yesterday. However, the stock slipped a bit in late morning trading today to $13.26.

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