Motorola Taps Ex-Sun President As New CEO

It's staking its future on Ed Zander following a three-month search to replace Christopher Galvin, grandson of the company's founder.

InformationWeek Staff, Contributor

December 17, 2003

4 Min Read
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CHICAGO (AP) -- Motorola Inc. named former Sun Microsystems executive Edward J. Zander as its new chairman and chief executive officer Tuesday, staking its future on an outsider after a three-month search to replace Christopher Galvin, the grandson of the company's founder.

Zander was the unanimous choice of Motorola's board of directors in a Sunday night vote and will take over his new job Jan. 5. He had stepped down from his Sun job last year and became a managing director at Silver Lake Partners, a private equity firm with offices in Menlo Park, Calif., and New York.

The 56-year-old Zander was chosen over Mike Zafirovski, who took over as president and chief operating officer of the Schaumburg, Ill.-based company last year. Zafirovski was highly regarded but was unable to halt the operating stumbles that have caused Motorola to struggle in the past several years, falling far behind Nokia in the global cell-phone market it once dominated.

Galvin had announced his intention to leave in September after clashing with the board over strategy and the pace of the company's turnaround.

"Ed is recognized as one of the most outstanding business leaders and intellects in the field of technology and business operations," said John Pepper Jr., director and chairman of the CEO search committee.

Zander was approached by a Motorola executive recruiter in October but acknowledged he didn't immediately jump at the job, eager to stay on the West Coast. He ultimately was persuaded after weeks of deliberation, due diligence and talks with Pepper, a Motorola board member.

"It was a slow build for me because I wanted to be convinced that this was a company where I could make a difference," he said in an interview with The Associated Press. He cited the company's powerful base of technology and customers, global brand name, $3.5 billion in annual research and development spending, and the fact it is in "the sweet spot of where technology's going over the next decade or two."

"I looked at my wife one day and we looked at each other and said, 'This is an opportunity you're not going to get again. You don't get offered a chance to run a Fortune 60 company every day,'" he said.

Zander's rise through the executive ranks of Sun Microsystems ultimately was blocked by the presence of Scott McNealy, who was solidly entrenched in the CEO's spot.

He said he needed time to come up with both a short-term and long-term vision for Motorola.

"The biggest mistake you can make is to come up with a plan before you're even in the building," he said. "The important thing for me is talk to customers, listen, learn, and develop a plan in the first several months."

But in an interview and in comments to analysts, he said he doesn't consider Motorola to be "a turnaround case," noting that it is cash-flow positive and has a strong balance sheet and growing revenues.

Morningstar Inc. analyst Todd Bernier said Motorola did well to land a "prize free agent" who is viewed as both a big thinker in the tech world and an operations expert, sought after as CEO by numerous other companies.

"First of all, he's fresh blood, so he's not a part of the Motorola culture," Bernier said. "I think they definitely need a change. ... I think he's going to be one of these guys who comes in and asks tough questions, asks 'Why are we doing this?'"

A huge restructuring and cost-slashing effort returned Motorola to profitability in 2002 after two years of losses. But a slowed economy and sluggish demand have stymied its recovery.

The company has eliminated nearly 60,000 jobs since August 2000. Zander said it was "way too early" to comment on whether further restructuring is in order. He said the company's success ultimately will be measured by market share.

After Galvin disclosed his plans to resign after seven years at the helm of Motorola, the company announced it would split off its semiconductor unit--a decision Zander said he endorses.

Troubles continued in the cell phone division, though, as the company acknowledged it would not make it to market with its first camera phones in time for the holiday shopping season.

Motorola's stock has lost more than 75 percent of its value since topping $60 a share in 2000, although it has recovered steadily since beginning 2003 at $8.65, just above its lowest price in a decade.

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