What was supposed to be the first public address to the Wall Street community for Motorola's newly appointed president Mike Zafirovski was briefly overshadowed by talk swirling around a curiously timed stock sale by CEO Chris Galvin.
chief executive Chris Galvin was taken to task this morning in a
New York Times
filings revealed he had sold 40,000 shares of the company on Wednesday, the night before the company's chief operating officer Ed Breen announced he was leaving the company to run troubled electronics component manufacturer
News of Breen's departure, which broke last Thursday, sent shares of Motorola plunging more than 10%, as Tyco shares surged over 45% a day after the announcement. In trading Tuesday, Motorola shares lost 11 cents, or 0.91% to $11.98.
Taking time out of his opening remarks at the company's annual analyst conference, Galvin said the sale was part of a 1992 options package of 240,000 shares and that he had followed the company's strict guidelines, which mandates that insider sales cannot occur until at least three days after the company reported earnings.
More important, the chief executive of the world's second-largest handset manufacturer said he had no knowledge of Breen's departure until Thursday morning, a day after the sale.
Discussions with analysts last week after Breen's departure confirm the timing. Segueing into an introduction to Zafirovski's presentation, Galvin explained that Zafirovski was promoted from his position as the head of Motorola's largest grossing handset unit to the new position, within six hours after Breen informed Galvin of the move. The board of directors, according to Galvin, approved Zafirovski's promotion within 20 minutes on Thursday evening. Motorola confirmed Tyco's news by 5:30 p.m. Thursday.
Separately, Zafirovski reiterated Motorola's 2002 and 2003 financial guidance. The company expects to continue to post quarterly profits, excluding special charges of 5 cents per share, on revenues of $6.7 billion, in the third quarter, with operating cash flow to be "slightly positive."
Motorola expects to post earnings of 14 cents a share, excluding charges and revenues of $7.5 billion, with full-year operating cash flow to be $1 billion. By 2003, it expects full-year EPS to be 45 cents a share and revenues of approximately $29 billion. Capex will be $1.1 billion to $1.3 billion, reflecting tighter purse strings.