Motorola shakes up executives
Wireless vendor giant Motorola’s top-level management has undergone a significant shake-up, with former Chief Operating Officer Greg Brown replacing Ed Zander as CEO, and Chief Technology Officer Padmasree Warrior departing the company to assume the same role at Cisco Systems. Some analysts believe more structural changes could occur during this year.
Zander’s departure was expected. Although he became a Wall Street darling as the remarkably popular RAZR vaulted Motorola into a position as the solid No. 2 wireless handset manufacturer in the world, Zander had been under increasing pressure as Motorola fell to the No. 3 slot behind Samsung in market share — a slide that has been reflected in the value of the company’s stock.
Zander, 60, will remain as Motorola’s chairman until the annual stockholders’ meeting in May. Zander had identified Brown as his successor two years ago, said Jennifer Erickson, a spokesperson for Motorola. According to an SEC filing, Zander will receive no severance package for stepping down as CEO.
“It was Ed’s decision to retire as CEO … and spend more time with his family,” Erickson said.
Brown, 47, headed Motorola’s enterprise mobility business — a unit that includes mission-critical communications solutions for public safety — until being named the company’s president and COO in March 2007. Brown, who will maintain his president and COO roles, was largely credited with Motorola’s $3.9 billion acquisition of Symbol Technologies and served as CEO at Micromuse before joining Motorola in 2003.
Some analysts expressed disappointment that Brown was named as Zander’s successor, noting that someone with no ties to Zander would be more appropriate to revamp the company.
“I don’t expect that ship to be righted in the next four quarters,” said John Jackson, vice president of enabling technologies for Yankee Group. “Within that timeframe, it is likely that you’ll see more radical corporate restructuring.”
Further supporting this view is the fact that the CTO void left by Warrior was filled by Rich Nottenburg, a longtime Zander associate and previously Motorola’s chief strategy officer, Jackson said. Nottenburg’s new title is chief strategy and technology officer.
“You replace your CTO with a strategy guy, who’s kind of [a mergers and acquisitions] guy,” Jackson said. “That, to me, says you’re going to see some kind of restructuring.”
And that restructuring could see the introduction of new faces in Motorola’s upper ranks if the company’s handset struggles continue, Jackson said. In fact, Jackson referred to both Brown and Nottenburg as “interim,” even though the word was not attached to either executive’s title.
Mobile wireless consultant Andrew Seybold, president of Andrew Seybold Inc., declined to speculate on the length of Brown’s tenure but acknowledged that Motorola is “in a lot of trouble” and needs a quick turnaround.
“I think they need someone from outside. … It can’t be business as usual for them,” Seybold said. “I don’t know Greg Brown, so it could be that he’s what they need. I just think they got themselves into problems by listening to themselves and not taking a fresh look at what’s going on in the world around them.”
On the surface, Motorola is uniquely positioned for the apparent transition to converged first-responder communications, given its background as the dominant public safety vendor and a high-ranking manufacturer of commercial wireless gear. But Jackson questioned whether these resources could be leveraged cooperatively.
“The extent to which the existing business units have not been able to achieve a lot of synergy indicates to me that any of that benefit may be a myth,” he said. “They certainly know consumer devices, and they know public safety. But the left hand doesn’t know what the right hand is doing, so it’s not a slam dunk. You can’t conclude that the benefit can be harnessed.”
In a statement released at the time he was named CEO, Brown said he was “intensely focused on building shareholder value.” Jackson said he believes Motorola should consider spinning off its public safety communications unit, which needs to adapt rapidly to a fast-changing market that is moving toward more standardization and commercial technologies.
“In that regard, a public safety business unit may be better off standing alone — it may be more agile standing alone rather than being something that is beholden to a broader corporate agenda that includes connected homes, networks and devices,” Jackson said. “If I’m looking to create greater shareholder value, it’s going to require a degree of nimbleness that Motorola certainly doesn’t exhibit right now. That would imply that it may have a better opportunity as a spin-off.”
One potential problem with such an approach is that Motorola’s public safety unit has remained strong while its commercial-handset efforts have fluctuated significantly, Seybold said. “The group that’s carrying them right now is their two-way radio group,” he said.
MOTOROLA’S RAZR-THIN MARGIN FOR ERROR
Ed Zander becomes Motorola’s CEO.
Zander unveils the Motorola RAZR, the world’s thinnest cell phone.
Motorola claims 22% market share in the cellular handset market for Q1, and company officials project further growth throughout 2006 and 2007.
Motorola’s handset market share in Q1 falls to 18%.
Motorola’s handset market share drops to 13%, falling to third behind Nokia and Samsung. Greg Brown is announced as new CEO.