Handsets Moto’s Only Disappointment: Why Zander Is Leaving

So Ed Zander is out of the top spot at Motorola (NYSE: MOT) after resisting pressure to leave for most of the past year … Surprisingly, Bloomberg reports that Zander said he started talking to the board about a leadership change earlier this year but large shareholders such as Carl Icahn played no role in the decision. Icahn led a pretty serious effort to get Motorola’s board to fire Zander and attempted to get a seat on the board himself, but failed. This was followed a few months later by a less-threatening campaign promoted via YouTube.

Most of the articles mention the Razr, the hit phone that made Motorola’s fortune a few months after Zander was appointed CEO, although few have made the point that Zander couldn’t take a lot of credit for the handset since it was in development long before he became CEO. Since that success Motorola has seen its market share fall dramatically to 13 percent in the last earnings report; handset sales for the third quarter were down 36 percent compared to the same period a year ago. In a comment that proves that understated irony is not dead, Zander said: “The one disappointment this year has been mobile devices…The management there had a strategy that proved not to be correct. That’s been corrected. We’ll be back”. The big problem with mobile handsets being the one disappointment is that they were Motorola’s main business. In Q306, handset sales were $7.034 billion, 66 percent of Moto’s total revenue. A year later, handset sales were $4.496 billion — just half of all revenue. It should also be noted that non-handset mobile phone efforts haven’t been very inspired or successful — for example, Motorola’s content portal smacked of “me too-ism” after Nokia (NYSE: NOK) launched Ovi.

With all that in mind it is unsurprising that Zander is leaving — Moto made a big error of judgment a year ago; that may have been forgiven if the company had turned around, but it didn’t. As CEO, that fault lies squarely at Zander’s feet; that’s why he got the big bucks. Which reminds me, I haven’t seen any mention of the payout he’s going to get…
Our full Motorola coverage is here.

Dianne adds: Motorola

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