Friday, November 30, 2007

It's "Goodbye Moto" for CEO Zander

Not having another Razr helped cut short the reign of Motorola CEO Ed Zander.
Motorola announced that Zander would be stepping down as CEO by year end and will be replaced by Greg Brown, current president and chief operating officer. In a statement, Zander said he's leaving, in part, to spend more time with family.
OK, we'll go with that.
In reality, Zander and Motorola never really meshed very well. He was always a little too brash and cocky for the basically conservative electronics company. He liked publicity and would occasionally say the wrong things in public--like a few years ago when he openly dismissed Apple's iPod Nano by saying “Screw the Nano” and asking who will listen to a device with 1,000 songs on it.
His remarks came despite the fact that Motorola and Apple were longstanding partners and the two companies had teamed up to bring out Motorola’s Rokr phone, which uses Apple iTunes software. Even then, Zander probably knew Apple was going to introduce a rival cell phone and wasn't too pleased.
But don't forget Motorola's board brought Zander in from Silicon Valley four years ago to shake things up. Early on, he accomplished that with more flair, and less humility, than many of the company's remaining old guard would like. Nevertheless, he sold business units, laid off people, and refocused on product development and marketing (remember the "Hello, Moto" ad campaign?). Zander also pushed his people, saying "Let's get Motorola cool", a comment he reiterated when I interviewed him for a Chicago Magazine story in 2005.
In fact, the Razr was considered so "cool" it became the hottest selling cell phone in the world, lifting Motorola's earnings and share price accordingly. During this time, Zander appeared to do no wrong.
But while basking in the glow of the Razr success, there was back-channel talk that there was less to the CEO than met the eye. Zander was merely executing a turnaround plan started by former CEO Chris Galvin, whose family founded Motorola and remains a major shareholder, the old timers said.
Let's see how well he does when the Razr fades and has to be replaced with a new generation of cell phones, they muttered.
Apparently, not so good.
His Rokr line didn't click with consumers, while the subsequent generation of Razr phones never matched the initial success. More than that, Zander seemed to lose control of the global company's production and distribution channels, resulting in overstocked inventory that translated into earnings woes, which weakened the company's financial performance and stock price.
Moreover, Motorola seemed at a loss for the next big idea.
Although sitting on $11 billion in cash, the company would only make small, speculative acquisitions--sort of placing bets on emerging technologies or ideas--while competitors went out and made big buys. One glaring example occurred in Motorola's own backyard when Nokia spent $8 billion to acquire Chicago-based NAVTEQ, a leading provider of Geographic Information Systems.
The cash horde did not go unnoticed by corporate raider and Motorola investor Carl Icahn. He argues that $11 billion is way too much cash in the vault and if management wants to hold money, it should be running a money market account not a company.
Icahn wants Motorola to restructure and with Zander out of the way, he may soon get his wish. Others fear another shoe is going to drop and the company's cell phone unit is ripe for another money-losing disaster.
Meanwhile, expect Zander, 60, to return to Silicon Valley, where he has kept a residence throughout his time at Motorola.
In all honesty, Zander never expected to stay at Motorola very long and conceded that during my 2005 interview, when I asked him to predict the length of his tenure. His reply: “We get two, three years.”
Using that cutting edge measure, Zander actually stayed longer than expected.


(Photo courtesy of Dan Farber on Flickr.com)

2 comments:

adam hartung said...

Ed Zander inherited a very troubled Motorola, and lest us forget he reinvigorated communications and opened doors for innovation. Several new products were introduced in all Motorola businesses, and the company remains at the forefront of 2-way radios in almost all markets as well as DVRs. The company beat Apple to market with the ROKR and several other products. Unfortunately, not enough emphasis was placed on growing revenues from these innovations, and discussion devolved to talking about cell phone market share - a not-too-interesting topic. Read more at http://www.ThePhoenixPrinciple.com

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