Subject: [NEXTEL-1] A disconnect at Motorola

From: Marcel <[email-masked]>
Date: Tue, 31 Dec 2002 16:18:19 -0500

A disconnect at Motorola
By Julie Johnsson

December 31, 2002

Hello, Moto . . . Moto? Moto? Five years into the Christopher Galvin era, the identity of
Schaumburg's Motorola Inc. remained frustratingly fuzzy, its future unclear. 

Mr. Galvin, Motorola's courtly chairman and CEO, drew investors' ire as the $30-billion
electronics giant stumbled in efforts to infuse its staid, Midwestern engineering culture
with new managerial blood and a stronger consumer focus. 

Motorola's shares fell below $8 for the first time in more than a decade as Mr. Galvin
failed to articulate a new strategy for growth amid tough markets for the company's core
businesses: cell phones, network infrastructure and semiconductors. 

While deep cost-cutting finally stemmed the tide of red ink, Motorola did little to shed
its image as a company that creates great gadgets — then concedes their markets to
competitors. 

Motorola developed snazzy new cell phones, but delayed their launch for months, losing a
chance to grab marketshare as global handset sales began to rebound later in the year.
What's worse, its top rivals, Finland's Nokia Oyj and Korea's Samsung Electronics Co.,
seized this opportunity, boosting sales 14% and 52%, respectively, with phones featuring
cameras, games and color screens. 

Another blow: the abrupt exit of Edward Breen, Mr. Galvin's No. 2, an outsider whom Wall
Street viewed as the company's savior. Michael Zafirovski was rapidly promoted to
president and chief operating officer to replace Mr. Breen, who quit to run embattled Tyco
International Ltd. 

Mr. Zafirovski, better known as "Mike Z," brings a General Electric Co. pedigree and a
reputation for building teamwork and making bold decisions. Some observers saw his hand
behind a bid to pull off a blockbuster deal with Germany's Siemens AG to trade Motorola's
wireless network business for Siemens' cellular handset unit. 

The deal was later derailed by cultural issues and a disagreement over how much cash
Motorola would pay Siemens in the deal. Spokeswomen for both companies decline to comment
on the swap flop, although the Siemens representative adds that the companies continue to
talk. 

Motorola will be pushing hard to sell either its wireless infrastructure or semiconductor
business in 2003. That would cement Mr. Zafirovski's status as Mr. Galvin's heir apparent,
sharpen the company's focus as a maker of devices and have investors saying, "Hello,
Moto!" 

http://www.chicagobusiness.com/cgi-bin/news.pl?id=7515

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