Nov. 30 -- Ed Zander, who revived Motorola Inc. with the Razr phone only to see its popularity evaporate, will step down as chief executive officer in January.
President Greg Brown, who joined the company in 2003, will take over. Zander, 60, will remain chairman until the annual investor meeting in May, Motorola said today.
Motorola slipped to third in global mobile-phone sales under Zander, a Brooklyn-born engineer who earned his business degree through night school. Nokia Oyj widened its lead, Samsung Electronics Co. took the No. 2 spot, and Apple Inc.'s iPhone supplanted the Razr as the cool new phone on the market.
``A change had become necessary,'' said Brad Williams, an analyst at MTB Investment Advisors in Baltimore, which manages $11 billion and sold its Motorola shares this year. ``Zander tried to run too far on the Razr platform. That's all the company has talked about for a couple of years now.''
Motorola shares have lost 24 percent of their value since Jan. 4, when the company first missed forecasts for sales and profit. They rose 20 cents to $15.85 at 12:01 p.m. in New York Stock Exchange composite trading.
Pressure on Zander increased as billionaire Carl Icahn mounted a proxy contest for a seat on the board. While Zander won the fight, Icahn said he'd press for him to leave if the business didn't improve by year-end.
Icahn's Pressure
In an interview today, Zander said he started talking to the board about a leadership change this year. Shareholders such as Icahn played no part in the decision, he said. Icahn didn't return a call seeking comment.
Brown, 47, has run four businesses at Schaumburg, Illinois- based Motorola. He led the $3.9 billion purchase of Symbol Technologies, the second-largest transaction in Motorola's history. He also returned the automotive business to profitability and spearheaded the $1 billion sale of the unit.
The biggest challenge is to ``regain the momentum'' of the handset business, Brown said in an interview. ``We've got to get that organization more profitable, refresh the product portfolio.''
MTB's Williams said Brown's appointment won't convince him to buy Motorola shares again.
``This isn't going to change my opinion because Greg Brown is from within the company,'' he said. ``They should have brought in someone more market-focused rather than technology- focused.''
First Profit
In October, Motorola posted its first profit in three quarters and gave a forecast that surpassed analysts' estimates after eliminating more than 5,000 jobs and unveiling a new version of the Razr phone. Still, sales slumped 17 percent to $8.81 billion last quarter, short of estimates.
``The one disappointment this year has been mobile devices,'' Zander said. ``The management there had a strategy that proved not to be correct. That's been corrected.''
Zander, who marks his 40th year in the technology industry next year, said he is moving to the ``next phase'' in his life and spending more time with family. He was previously president of Silicon Valley computer maker Sun Microsystems Inc.
Zander will be an adviser to Brown through the end of 2008, and won't stand for re-election to the board at the annual meeting. He will receive a salary and won't receive any new equity grants or a bonus. He can also continue to exercise any stock options according to their terms, though he will forfeit any options that haven't vested by Jan. 5, 2009. Zander will also get a $5.3 million deferred bonus from 2004.
Nokia Gains
Nokia increased its market share by unit sales to 38.1 percent in third quarter from 35.1 percent a year earlier, according to Stamford, Connecticut-based researcher Gartner Inc. Samsung boosted its share to 14.5 percent from 12.2 percent, while Motorola fell to 13.1 percent from 20.7 percent.
``Marketing skills'' and ``pizzazz'' were Zander's main contribution, Oppenheimer & Co.'s Lawrence Harris said in an interview. Under Brown, Motorola will accelerate product introductions and focus on cutting costs and improving manufacturing and distribution, Harris said. The New York-based analyst has recommended buying Motorola shares since October.
Zander joined Motorola in January 2004, winning the top job and beating out then-President Mike Zafirovski, who left in 2005 to head Nortel Networks Corp. The all-metal Razr came out months after Zander took over and has sold more than 110 million units, the most of any Motorola product.
Razr Fades
As the prestige of the sleek phone started to fade, Zander resorted to price cuts last year to compete with new video and music phones from Nokia and Samsung, as well as e-mail phones from Research In Motion Ltd.
Competition increased in June when Apple CEO Steve Jobs introduced the iPhone, which blends the iPod media player with an e-mail-equipped handset. Apple, in Cupertino, California, sold out of the iPhone at most of its stores less than a week after the product's debut.
Brown, who has a bachelor's degree in economics from Rutgers University, was CEO of Micromuse Inc., the network- management software company. He did stints at Ameritech Custom Business Services and Ameritech New Media Inc. and held sales and marketing positions at AT&T Inc.
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