ICAHN-O-CLASH
Motorola CEO Ed Zander is being shown the door after failing to revive the mobile device maker’s ailing cellphone business.
The Brooklyn-born executive – who has been under assault for months by activist investor Carl Icahn – will step down as CEO on Jan. 1, but will remain as chairman until the company’s annual meeting in May.
Victorious Icahn, who owns a roughly 5 percent stake in Motorola, called Zander’s exit a “positive step,” but didn’t let the company off the hook when it comes to a need for drastic changes.
“As I said at Motorola’s shareholders meeting last year, although I like Ed Zander personally, I never thought that he was the right man for the job at Motorola,” Icahn said. “I believe that the steps announced today do not even begin to address the major problems at Motorola.”
Icahn said he continues to believe that Motorola should be completely restructured and split up into four separate companies.
Zander, 60, handpicked Motorola President and Operating Chief Greg Brown, 47, who joined the company in 2003, to take over the helm.
The choice of Brown, with his close ties to Zander, failed to inspire much hope among investors for a quick turnaround at the company, which has fallen to third place in worldwide cellphone sales under their leadership.
Motorola’s stock price gained 2 percent, or 32 cents to $15.97 on yesterday’s shake-up.
The shares have lost nearly a quarter of their value since early January, when Zander and other top executives warned that profits would come up short because the company’s heavily hyped RAZR, the fastest-selling phone ever, was losing cachet.
Soon after that surprise shortfall, shareholder Icahn, a 1980s corporate raider turned shareholder agitator, started campaigning for a board seat and a shake-up at the company.
In May, when Motorola’s woes continued to deepen, Icahn set his sights directly on Zander. Icahn failed to win a board seat, however, a sign that investors were willing to give Zander more time to try to turn around the company.
But Motorola’s market share continued to erode and its profits dwindled, leading to the board’s decision to let him go.
Zander said in an interview with Bloomberg News that he started talking to the board about a leadership change this year and that shareholders such as Icahn had no role in the decision.
As his four-year stint as CEO of Motorola began, the company’s fortunes soared, fueled by the incredible buzz surrounding the RAZR.
Some industry observers even thought that the company might unseat Nokia as the No. 1 cellphone maker.
But the hype surrounding the RAZR fizzled and new products, such as the music-phone ROKR, failed to inspire.
Brown, appointed to Motorola’s board earlier this year, is charged with coming up with new hit phones and regaining the company’s lost market share.