CEO Resignation Lifts Motorola

Analysts unanimously praise the step, saying new management could streamline the company.
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Motorola

(MOT)

caught a bid in premarket trading Monday as analysts rejoiced over the resignation of CEO Chris Galvin.

The shares were recently up 97 cents, or nearly 9%, to $12.06 on Instinet.

Merrill Lynch upgraded the mobile-phone company to a buy following news of Galvin's resignation, which was announced Friday. The brokerage said new blood could usher in an era of streamlining at the company, "including the possible disposal of under-performing or non-synergistic assets."

Merrill said a sum-of-the-parts analysis indicates Motorola is worth about $15, applying a discount for its portfolio structure but assuming further restructuring under Galvin's successor.

Galvin, whose grandfather founded Motorola, announced his decision after the markets closed on Friday, saying, "While I have achieved substantial results, the board and I do not share the same view of the company's pace, strategy and progress at this stage of the turnaround. Accordingly, it is time for me to pass the baton to new leadership."

Deutsche Bank upgraded the shares to hold from sell and set a 12-month price target of $12.

"While Motorola remains a very challenging environment and will continue to struggle in several of its key business areas, the company's segmented technologies do possess intrinsic value that can be better realized under strong leadership," Deutsche Bank wrote.

Galvin has been blamed by many for Motorola's loss of market share, particularly in cell-phone handsets, where it now trails

Nokia

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. Motorola dominated that market in the mid '90s, and was slow to see the potential in low-cost phones.

Morgan Stanley upgraded the stock to overweight and predicted investors will start to believe in Motorola's long-term prospects.

"We believe investors will look through our second-half of 2003 handset and semiconductor concerns and perceive the pending management change as a driver for change at one or more of Motorola's struggling business units," Morgan Stanley wrote.

The company has seen a year-over-year decline in revenue for five straight quarters.