Subject: [NEXTEL-1] Wall Street Positive on Motorola CEO Exit

From: [email-masked]
Date: Mon, 22 Sep 2003 13:36:28 -0400

http://biz.yahoo.com/rb/030922/tech_motorola_2.html

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Reuters

Wall Street Positive on Motorola CEO Exit
Monday September 22, 1:11 pm ET

By Ben Klayman

CHICAGO (Reuters) - Motorola Inc.'s (NYSE:MOT - News) shares surged
as much as 11 percent on Monday as Wall Street hailed Chairman
and Chief Executive Christopher Galvin's impending departure,
hoping it could lead to the breakup of the company.

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At least five analysts upgraded their ratings on the stock
of the world's second-largest maker of cell phones, citing
investor belief that a new leader would likely review Motorola
businesses, possibly leading to the sale or spin-off of one or
more units.
Galvin, who said Friday he would retire when a successor is
named, has long resisted selling businesses at the company his
grandfather founded and his father led. The 53-year-old
executive cited disagreements with the board over the company's
strategy for his decision.
The most likely targets in a breakup include the
money-losing semiconductor unit, the struggling wireless
equipment business, the cable set-top box unit and the
automotive electronics business, analysts said.
"A new CEO could be more aggressive and put more emphasis
on execution of growth and profitability plans, including the
possible disposal of underperforming or non-synergistic
assets," Merrill Lynch analyst Tal Liani said in a note to
clients. He upgraded his rating to "buy" from "neutral."
He has a 12-month price target of $15 on the stock.
"It's not like the market moved away from (Motorola)," said
Henry Asher, president of the Northstar Group, a New York money
manager with a small stake in Motorola.
"Here the disruptive force was someone did it better. Maybe
there's someone in Finland who can run this company," Asher
added, referring to the home country of Motorola's larger
cell-phone rival, Nokia (NOK1V.HE) (NYSE:NOK - News). He said he would
support a break-up of the company.
Motorola's slow response to demand for color display
screens and cell phones with integrated digital cameras is
reminiscent of the mid-1990s, when it failed to follow its
successful products with more advanced ones and lagged rivals
in rolling out hot technologies. Missteps in other businesses
have also hurt its competitiveness.

ZAFIROVSKI A POSSIBLE REPLACEMENT
However, Motorola spokeswoman Jennifer Weyrauch said, while
everything was being considered, breaking up the company, or
the sale of the chip or wireless equipment units, were not
among the options at this time.
Other firms that upgraded the stock included Deutsche Bank
Securities, Morgan Stanley, SoundView Technology Group (News - Websites) and RBC
Capital Markets. Some said a new CEO could also further trim
the company's 90,000-person work force.
Some analysts expressed concerns Schaumburg, Illinois-based
Motorola's financial results may come up short in the current
quarter. However, the company said Friday it recently
reaffirmed forecasts.
The main focus was on the possible breakup of the company
and who might lead Motorola, with many supporting the promotion
of President and Chief Operating Officer Mike Zafirovski.
"We believe Galvin's exit portends a radical shift in
Motorola's structure and it is likely the next set of decisions
put the company on a more shareholder-friendly course,"
SoundView analyst Matt Hoffman said in a note. "We would regard
the selection of Mike Zafirovski as a positive."
Hoffman upgraded his rating on Motorola's stock to
"outperform" from "neutral."
Some analysts and investors want an outsider with fresh
ideas and untainted by past mistakes. Another option would be
to promote Zafirovski to CEO, but name someone else chairman.
However, everyone wants the successor named quickly to
avoid executive turnover, low employee morale and further
damage to the company's competitiveness.
The board's search committee includes former Motorola
executive Indra Nooyi, now president and chief financial
officer of PepsiCo Inc. (NYSE:PEP - News), but a person familiar with the
search said the board was not looking at her.
Tyco International Ltd. (NYSE:TYC - News) said Chairman Edward Breen,
who was president of Motorola before leaving last year, had no
plans to leave.
Motorola's stock was up $1.01, or 9 percent, at $12.10
Monday afternoon on the New York Stock Exchange (News - Websites), where it was
the most actively traded issue. Earlier, it hit $12.33, its
highest intraday price since early September 2002.

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