Motorola, which once had dominated the market, had dropped to third place behind Samsung.
Motorola's board of directors Friday announced that chief executive Ed Zander will be stepping down from his post to be replaced by president and COO Greg Brown.
Virtually on one was surprised that Brown was named CEO. Brown's star has been rising rapidly ever since he was named Motorola's chief operating officer last summer. Zander, who said he welcomed the opportunity to spend more time with his family, praised Brown. Zander will remain as chairman until May 2008.
"(It was) my date, my doing, my time frame," Zander told Reuters.
A report from the Gartner Group Tuesday provided an intuitive foretelling of the reasons behind the management change: in Gartner's latest rankings of the worldwide mobile phone market, Motorola, which once had dominated the market, had dropped to third place behind Samsung. Nokia continued to consolidate its market share lead with its handset shipments totaling more than the next three competitors combined.
Zander enjoyed a brief euphoric period of rising sales and profits as Motorola scored a big hit with its family of RAZR handsets but the popularity of the fashionable phone was short lived as competitors introduced advanced smart phones.
Brown, Zander and lead Motorola director Samuel C. Scott III released statements hailing the management changes.
"I want to take this opportunity to thank Ed (Zander) for his vision, expertise and tireless commitment to Motorola," Scott said. "The Board is delighted that Greg will serve as CEO. We are confident that he will bring a combination of strategic insight, operational discipline, and inspirational leadership needed for accelerated and sustained growth."
Unlike Zander, who came to Motorola in 2003 from computer manufacturer Sun Microsystems and a venture capital company, Brown has had experience running Motorola operations. He earned high praise for leading Motorola's $3.9 billion acquisition of Symbol Technologies and in addition he returned Motorola's once-ailing automotive business to profitability before it was spun off for $1 billion. Brown, who joined Motorola in 2003 after a career in the public telephone business at AT&T and Ameritech, also directed Motorola's government and public safety business.
With stock analysts and financial raider-turned-shareholder-activist Carl Icahn complaining about Zander's leadership, the management shake up wasn't unexpected. In July, one investment banking company predicted Zander would be soon gone. "While we fully expect Zander's departure this year, there is no visibility on when," Charter Equity said, according to media reports at the time. "His strategy is clearly not working."
While there were high hopes for Zander when he arrived at Motorola, the firm's well regarded number two executive, president and COO Mike Zafirovski, said he was disappointed he didn't get the top post. Zafirovski soon left Motorola for the top post at Nortel. Other top managers followed him out the door.
Stock analysts, who had previously hounded Christopher Galvin from Motorola's top spot to make way for Zander, praised Friday's management change and helped send the firm's stock up in early trading.
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