Motorola's Slumping Handset Sales Put Pressure On CEO Zander - InformationWeek

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Motorola's Slumping Handset Sales Put Pressure On CEO Zander

Motorola said handset shipments in the most recent quarter are expected to slip to between 35 milion and 36 million -- a substantial drop from the nearly 52 million units shipped in the same quarter a year earlier.

Motorola's struggle to find a hot-selling cell phone has taken on desperate overtones after the company shocked investors with a report that cell phone sales will be down, and the mobile devices unit will report a loss for the full year.

The negative report increased the pressure on Motorola chairman and CEO Ed Zander, who has been waging a battle with financier Carl Icahn. The financier has been quiet on Motorola lately, but the negative news could reactivate his skirmishing with Zander.

Also Thursday, the company named Stu Reed president of the company's mobile devices business effective immediately. Reed had been executive VP of Motorola's integrated supply chain organization.

Stock analysts, the same group that forced out Christopher Galvin as CEO a few years ago to pave the way for Zander's takeover of the post, began circling Motorola's executive suite.

"While we fully expect Zander's departure this year, there is no visibility on when," said Charter Equity, according to media reports. "His strategy is clearly not working."

Like other mobile phone providers, Motorola has seen its new phones eclipsed by the hoopla surrounding Apple's iPhone. Zander got an early boost from the success of Motorola's Razr phones, but the company's handset sales have lagged in recent months.

Motorola said handset shipments in the most recent quarter are expected to slip to between 35 million and 36 million -- a substantial drop from the nearly 52 million units shipped in the same quarter a year earlier.

Sales for the quarter are expected to be between $8.6 billion and $8.7 billion, "essentially flat with first quarter 2007 sales of $9.4 billion," Motorola said.

"For the full year 2007, the company no longer expects the mobile device business to be profitable," the company said. "Second-quarter results for Connected Home Solutions and Networks & Enterprise businesses continue to meet the company's expectations."

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