Hey Zeno, Motorola Gets a New CEO

[adios]

Not much up on Motorola but from what I understand the outgoing CEO was a grandson of the founder of Motorola. Ed Zander was COO as Sun Microsystems until 2002. The scuttlebut was that Zander and Sun CEO Scott McNealy differed greatly on what should be done to restructure Sun. From what I can gather Zander wanted to change the business model drastically and cut the workforce by 1/3 to 1/2 at SUNW. McNealy wanted to develop new products and try and take market share away from competitors. To make a long story short I think Zander was right and McNealy was wrong. Linux has killed Sun (HP and IBM have adopted Linux in a big way let alone Dell) and any new products that Sun has developed have had little impact in sales. To further add to Sun woes I don't see their SPARC strategy as being viable in the 64 bit world and Intel is eating their lunch in the 32 bit world IMO. Intel economies of scale in manufacturing are awesome. Zander foresaw all of this IMO and I think he'll probably make a big difference at Motorola. It should be interesting and I would think that this would qualify as a big change that Ray refers to so I beginning to think MOT is a buy. Hold on to those shares Zeno /images/graemlins/cool.gif at least that's my take.

[Zeno]

Thanks for the heads up. Motorola is also starting a spin off company initailly called sps spinco, Inc. to operate its semiconductor industry. Just announced today. Press release (http://www.motorola.com/mediacenter/news/detail/0,,3690_3082_23,00.html)

[Ray Zee]

i recommended them when it was selling in the 8 and change something. i am still holding my mot shares. the change of ceo is indeed a major change. one needs to figure if the new ceo which doesnt have an historic interest in the company will be for the better or worse. i dont know.
i am always worried when a big wig comes in from another place as his motives may be for his enrichment rather than the companies. like k mart for instance.

[adios]

I do know this, Zander did sell heavily his SUNW stock during the tech bubble but I also know he wanted to make big changes at Sun when the downturn hit. Anyway in case you haven't read this article yet, here's a little piece in about Zander and his new job from today's WSJ:

Zander Faces
Go-Slow Culture
At Motorola

By JESSE DRUCKER and JOANN S. LUBLIN
Staff Reporters of THE WALL STREET JOURNAL


When he resigned as president and chief operating officer of Sun Microsystems Inc. last year, Edward J. Zander said he wanted to become a chief executive somewhere else.

He finally got his wish.


Motorola Inc. announced Tuesday that Mr. Zander would take the helm of the struggling Schaumburg, Ill., telecom-equipment maker, replacing Christopher B. Galvin, the grandson of the company's founder. When he starts work Jan. 5, Mr. Zander will inherit a $27 billion company with several operational challenges: It is on the verge of splitting off its second-biggest business, computer chips, and it is struggling to turn around a cellphone business -- soon to account for about half the company's revenue -- that continues to lose market share.

The computer-industry veteran also will face the challenge of re-energizing an enormous company that hasn't seemed to understand it is no longer the market-share leader in any of its biggest segments. For a company long accustomed to insisting that things are on the right track even when they weren't, Mr. Zander is already acknowledging that complacency can no longer be tolerated.

"We need a sense of urgency," he said in an interview Tuesday. "The execution is not what it should be. I have this [Motorola] camera phone. It's a great product, but it should have been out a while ago, and we should have been marketing the heck out of the thing."

Indeed, Motorola didn't start selling its first domestic camera phone until Thanksgiving week, missed the U.S. holiday shopping season with a second camera phone, and reported supply-chain difficulties with some models it has brought to market.

"We're not going to come in and shake the rafters, but we've got to get people who want to win and get a sense of urgency. That is not going to be easy," Mr. Zander added.

Mr. Zander's personality couldn't be more unlike that of the reserved Mr. Galvin, who agreed to depart in September, citing disagreements with the board. Raised in the working-class Bensonhurst neighborhood in Brooklyn, N.Y., the 56-year-old Mr. Zander is considered a consummate salesman, known for his sense of humor and for flying around the world to meet customers. At Sun, he often appeared on stage at product announcements. One year, he and CEO Scott McNealy dressed up like the characters from a home-improvement TV program, on a set meant to look like a carpentry shop.

While Motorola has had excellent engineers, it often has been criticized for coming up with good technology that bore little relation to what customers want. "There was more of a culture [of] 'Build it and they will come,'" said James Citrin, a senior director of executive-search firm Spencer Stuart, which handled the CEO hunt.

Laura Conigliaro, a computer analyst at Goldman Sachs, said Mr. Zander is the type of CEO that Motorola needs: "This is a guy who really understands markets and customers and marketing."

Mr. Zander, who has a bachelor's degree in engineering as well as an MBA, acknowledged that one challenge is the sheer size of Motorola. It has 90,000 employees, more than twice as many as Sun, and faces different competitors in its six different divisions spread all over the world. Another challenge is in its biggest business: even though cellphone unit sales are expected to reach an all-time high this year industrywide, prices keep dropping as new competitors enter the market.

While he insisted that Motorola doesn't need a complete "turnaround," Mr. Zander does have experience helping to transform Sun, which went from making computer work stations used by engineers to predominantly making and designing corporate server computers in the early 1990s. Like Motorola does now, Sun had several operating units during the 1990s. Mr. Zander took over the biggest one in 1995. Three years later he created an integrated sales force to represent Sun to big customers. "Ed brought some integrated coherence to Sun Microsystems," Mr. Citrin said.

In 2001, Mr. Zander tried to make dramatic changes at Sun that would have included eliminating 20% of the work force, according to Mr. Citrin. Mr. McNealy, Sun's CEO, disagreed. Instead, Sun, which has been struggling with declining revenue and profit, carried out multiple rounds of small-scale job cuts.

Mr. Zander was an early contender for the Motorola job, according to all involved. On the day Mr. Galvin said he would resign, Mr. Zander got an e-mail from a recruiter alerting him to Motorola's just-announced shake-up. The subject line said: "Your next big thing?"

Mr. Zander said he first dismissed the idea of taking the position, jokingly citing the brutal Chicago-area weather. Then he agreed to meet with members of the search committee, including search committee head John E. Pepper Jr., former head of Procter & Gamble Co. "You go in a house and know it's the house you want to buy; that's the way we felt about this man," Mr. Pepper said later. "He blew us away."

Mr. Zander, already worth about $100 million, will be well rewarded at Motorola, according to two people familiar with his compensation package: a $1.5 million base salary, a target annual bonus of about $2 million, and a hiring bonus of just under $2 million to be paid in cash and restricted-stock units. In his first year he also will receive more than two million stock options and about 350,000 restricted-stock units. A Motorola spokesman declined to comment.

One question will be the role of Mike S. Zafirovski, Motorola's president and chief operating officer, the other finalist for the top position. But Mr. Zander said he doesn't view that as a problem. "I can easily see where this is a two-man job," he said. To solve the tension, he said he would borrow a page from Silicon Valley, a site of his former employer, private-equity firm Silver Lake Partners: "We'll sit in a hot tub as we do in California."

---- Lee Gomes contributed to this article.

Write to Jesse Drucker at jesse.drucker@wsj.com and Joann S. Lublin at joann.lublin@wsj.com

Updated December 17, 2003