Struggles Cost Zander His Job

By Scott Ferguson  |  Posted 2008-03-26 Print this article Print


Motorola's struggles cost CEO Ed Zander his job. Zander resigned in January, replaced by Brown. Since his resignation, Motorola has seen high executive turnover, with new leaders in such areas as technology, finances and human resources.

Under Zander, Motorola slipped from No. 2 to No. 3 among the dominant handset makers. Since Motorola's mobile devices division represents about half of Motorola's sales, flattening RAZR sales and the lack of a successful follow-up spelled doom for Zander.

To offset the sales losses, Motorola began a price war in 2007 with market leader Nokia, a move that hurt Motorola's profits and left it with a lot of unsold inventory. Motorola announced in January another sharp decline in mobile handset sales, resulting in an 84 percent drop in fourth-quarter net income.

The news from the handset division overshadowed the better returns from the other division, which includes a number of consumer and enterprise products. For example, the enterprise mobility solutions division, riding on the strength of the Symbol Technologies acquisition, saw a 40 percent increase in operating earnings at the same time the handset division saw cell phone shipments slip.

Within this division, Sullivan-Trainor said the company will likely refocus its efforts on creating better infrastructure products for both its enterprise customers and consumers. The company can also focus on long-term projects, such as WiMax, which might yield bigger returns in the future but was unable to support the faltering handset division.

The split might also mean the infrastructure division will combine its operations with a company such as Nortel, although the Motorola brand name will likely continue, the analyst said.

"After this split, they are going to evaluate the remaining pieces and see what value they can get," Sullivan-Trainor said.

The split will take the form of a tax-free distribution to Motorola's shareholders and allow them to hold stock in both companies, according to Reuters. The move to split the companies should finalize in 2009.


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