Motorola surprises with CEO choice
Analysts were surprised that Motorola’s board of directors went outside the company to appoint former Sun Microsystems executive Edward Zander as chairman and chief executive officer. But they also believe the appointment could be good news for the company’s Commercial, Government and Industrial Solutions sector.
It had appeared that Mike Zafirovski, who will remain president and chief operating officer for at least the short term, was being groomed to replace Christopher Galvin, who announced his retirement in September 2003. Zafirovski had gained the support and loyalty of employees since taking his current post in July 2002, according to sources.
“I’m a little surprised. Given the reverence that Zafirovski appeared to have from the rank and file, he seemed the logical choice to succeed Galvin,” said John Jackson, analyst with The Yankee Group.
But in the end, Zander’s success as president and chief operating officer at Sun Microsystems, whose annual sales grew to $18 billion during his tenure, swayed the search committee as well as Motorola’s board.
“We knew in Mike we had a strong candidate, but … Zander built a very complex company and ran all of the aspects of the company that will be key here — R&D, sales, marketing — and [did] it superbly,” said John Pepper, a Motorola director and chairman of the search committee. “We also found in our due diligence that he inspired the people who were involved [in these activities]. … Our only concern was whether he would [take the job].”
However, Zafirovski has been with Motorola just three-and-a-half years, which likely hurt him in the eyes of the directors, Jackson said. Zafirovski joined Motorola in June 2000 to lead Motorola’s personal communications sector (PCS), the company’s 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.
Zander, who most recently was managing director of Silver Lake Partners, a private equity fund that focuses on technology industries, expressed hope during the announcement webcast that Zafirovski would stay in his current post for the long term.
“This is a big company with a lot of work, and I can easily see this as a two-man job,” he said.
Zafirovski was noncommittal. Though he acknowledged Zander’s “background and the wealth of his technology experience,” Zafirovski also said he was “very disappointed” by the decision. “It’s way too early to decide a timeline for my continuing role,” he said.
The perception amongst employees and outsiders is that Motorola had given the CGIS unit short shrift in recent years, in part because Galvin had become enamored of PCS. That should change under Zander, according to Albert Lin, telecom analyst with American Technology Research, who also was surprised by Zander’s selection.
“Zander has not spent a lot of time in consumer-focused products,” Lin said. “But he is very focused on operations and has a lot of experience in selling customized solutions to large organizations. The markets served by the CGIS sector are similar to what Zander has experienced in the past.”
Motorola began to pay closer attention to CGIS after the attacks of Sept. 11, 2001, said Lin, who predicted Zander quickly would be enamored with this sector after seeing public-safety organizations’ enhanced budgets in response to the emphasis on homeland security. The sector’s profit margins aren’t bad either, Lin said.
“They’re still the highest in the company, and CGIS doesn’t have to deal with severe market volatility like they do in the cell-phone business.”
