Motorola Looks Zippy to Zander

The new CEO says he doesn't need to do a turnaround. But will his No. 2 stick around?
Author:
Publish date:

New Motorola (MOT) Chief Ed Zander says his job is to "turn up," not turn around, the foundering wireless tech giant.

Investors embraced the news tepidly Tuesday, sending Motorola shares up 1.6%. Zander, lately with tech buyout firm Silver Lake Partners and previously COO at

Sun Microsystems

(SUNW) - Get Report

, says he likes Motorola's prospects. He'll spend the next few weeks talking to employees before he starts in earnest Jan. 5.

Many analysts see Zander as a good fit as Motorola seeks to revive its fortunes while there is still healthy demand for cell phones and wireless networking gear. But others question how well -- or even how long -- Zander will work together with Motorola COO Mike Zafirovski, who was passed over for the top job.

On a conference call with analysts, Zander tried to deflect attention from the obvious disappointment felt by Zafirovski. "We'll sit in the hot tub together," said Zander, "and figure out what we like about each other."

For his part, Zafirovski said he would stay on with the company, but declined to say how long. Zafirovski came to Motorola from

GE

(GE) - Get Report

, and was widely seen as the inside favorite for the CEO slot after Chris Galvin announced he would step down.

But under Zafirovski's day-to-day leadership, Motorola's largest division -- handsets -- twice botched its own performance, first by coming late to the holiday buying season with camera phones, then almost immediately running out of components for those phones.

The missteps likely caused Motorola a significant number of phone sales and most likely a few percentage points in its No. 2 market share position. Popular phones from Korean makers

Samsung

and

LG

, along with the already heavy competition from handset giant

Nokia

(NOK) - Get Report

and

SonyEricsson

, have made Motorola's blunders hard to ignore, say analysts and investors.

Pinpointing the issue in his comments to analysts Tuesday, Zander said that Motorola was one of the first companies to develop a camera phone and said the company "ought to be No. 1" in the camera phone market.

Ed Zander

When asked if he thought Motorola's restructuring efforts were now over, Zander said it was too early to tell. "Bear with me," he told analysts, as he promised to understand the various businesses and "modify the plans if they are not on a track to meet my goals."

Zander is expected to have a bit of a honeymoon period to work with Wall Street as he gets organized. The latest development comes at the end of an eventful period for Motorola, which has been laid low by inventory and camera-phone worries and wracked by repeated restructurings that have slashed its staff by 40% in a few years. Even so, Motorola shares have bounced off their spring lows with a vengeance, taking part in a broader market rally that has focused on tech stocks.

Now, one analyst said, investors should expect Zander -- and therefore the stock -- "will get at least a six-month grace period."