Zander Hire Is Paying Off at Motorola

Updated from April 20

Judging by Tuesday's action, Motorola (MOT) chief Ed Zander already may have earned his lavish pay package.

The onetime Sun Microsystems (SUNW) executive raised some eyebrows last month with the disclosure that he'd earn up to $24 million in his new post. But the naysayers were nowhere to be found after a mind-bogglingly good quarter -- the first full period with Zander at the helm -- ignited a rally that added nearly $10 billion to Motorola's market capitalization.

Motorola shares continued rising Wednesday morning, recently up $3.04, or 18%, to $19.26.

Now the Schaumburg, Ill., tech titan -- long the butt of jokes among investors for its many pratfalls -- is reborn as a high achiever, courtesy of some missteps by handset rival Nokia (NOK) and some stoked-up demand in the chips business.

"It's stunning," said Sanford Bernstein analyst Paul Sagawa, who rates Motorola stock sell. "Every business beat by a lot -- not just handsets. Shows you just how quickly market share can shift around based on new product deliveries in this market."

"The bar just got set higher," said Zander, on a postclose conference call with analysts. Motorola shares surged 20% after the impressive first-quarter beat and improving second-quarter guidance.

Beating by a Buck

For its first quarter ended in March, the wireless giant reported earnings of $609 million, or 25 cents a share, on revenue of $8.6 billion. That's well ahead of the year-ago profit of $169 million, or 7 cents a share, on sales of $6 billion.

The latest-quarter profit included about 7 cents of income from gains. On an operating basis, Motorola earned 18 cents a share in the period, which is miles ahead of the 7-cent Wall Street consensus as posted by Thomson First Call.

The news only got better for investors, as Motorola followed news of the blowout first quarter with a substantial bump in second-quarter earnings guidance. The company said strong performances at its handset and soon-to-be-separated semiconductors units led the advance.