Subject: [NEXTEL-1] Revolving door may start spinning at Motorola

From: [email-masked]
Date: Sat, 20 Dec 2003 15:13:07 -0500

Revolving door may start spinning at Motorola

By Ben Klayman
Reuters, 12.19.03

CHICAGO, Dec 19 (Reuters)

The revolving door at Motorola Inc.'s executive offices could start spinning as
its new chief executive draws up his strategy for the world's second largest
cell-phone maker, analysts and investors said.

While Wall Street speculation has focused on how long President Mike Zafirovski
will remain after losing out in his bid to lead the company to Edward Zander,
other executives will be on the hot seat as well.

"You've got a new guy with new ideas and not everyone is going to agree with
him," said Deutsche Bank analyst Brian Modoff, who has a "hold" rating on the
stock and does not own shares. "It's fairly obvious, you will see additional
turnover." Deutsche Bank does banking for Motorola.

Senior executives, including the heads of the cell-phone and wireless equipment
units, will be the first to face the new CEO's inspection, analysts said.

Motorola said on Tuesday that Zander, former president of Sun Microsystems Inc.,
would assume the positions of chairman and CEO early next month. He replaces
Christopher Galvin, who said in September due to disagreements with the board
that he would resign once a successor was named.

The Schaumburg, Illinois, company also said Zafirovski would remain. The
executive said on Tuesday he would make "no long-term commitments."

Most analysts expect him to stay no longer than a year, moving once he finds a
company to run.

"He may not resign today, but I don't see how the guy stays," said Shawn
Campbell, principal with Campbell Asset Management, which owns Motorola
preferred and common shares.

Depending on where Zafirovski lands, he could take executives with him as well,
Campbell said.

But with Motorola's main cell-phone business struggling with late product
deliveries of some hot-selling models and other businesses facing weak demand,
other top executives may choose to leave or be forced out, analysts said. Zander
simply may want to hire executives with whom he has worked before.

Analysts do not expect any changes immediately, as Zander has said he will take
time to size up the company and its businesses.

However, the struggles at Motorola's cell-phone unit, its largest business, may
jeopardize unit head Tom Lynch's job, analysts said.

"(The cell-phone unit) is going to be under the microscope," said Jane Zweig,
CEO of The Shosteck Group, a wireless consulting firm. "Clearly they've missed
on the execution side of things. The question is who's to blame."

Other executives whose futures on which analysts speculate include Chief
Financial Officer David Devonshire and Adrian Nemcek, head of the wireless
equipment business.

"Anybody that (Zander) decides isn't doing their job is on the chopping block,"
said Charter Equity Research analyst Edward Snyder, who has a "market perform"
rating on the stock and does not own shares.

Several analysts said such turmoil can't help but be a distraction for a company
that can least afford it.

Rivals such as Finland's Nokia, the world's largest cell-phone maker, and South
Korea's Samsung Electronics Co. Ltd., stand ready to take advantage.

In September, for instance, Verizon Wireless said Motorola would not deliver a
camera phone in time for the crucial holiday selling season, leading it to rely
more heavily on South Korea's LG Electronics Ltd.

"Any change in operations is going to benefit rivals because it isn't
production, it isn't getting things out the door," Snyder said. "It may lead to
better things in the future, but today it's not a good thing for Motorola." 

http://www.forbes.com/technology/newswire/2003/12/19/rtr1187722.html

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