Welcome!

Cognitive Computing Authors: Yeshim Deniz, Pat Romanski, Zakia Bouachraoui, Elizabeth White, Liz McMillan

Related Topics: Java IoT, Mobile IoT, Microsoft Cloud, Symbian, Open Source Cloud, SYS-CON MEDIA, Cognitive Computing , Silverlight, Wearables, Recurring Revenue

Java IoT: Article

Is Motorola the Next Sun? Thanks to Ed Zander

Since Ed Zander led Sun into the valley of the shadow of death, there's a good chance this may now happen to Motorola

Since Ed Zander led Sun into the valley of the shadow of death back – what? – over five years ago now, it has never recovered. And there’s a good chance the same thing may happen to Motorola.
 
With a year left to run on his contract, Zander quit yesterday – and clearly not a moment too soon given the events of the last year or so. There are people who would have gladly ridden him out of town on a rail months ago and it’s assumed he’s resigning now to avoid getting fired.
 
Zander, whose telecom experience consisted of answering the phone, was brought in four years ago to narrow the lead in phones between a first-place Nokia and a second-place Motorola.
 
Motorola is now in third place, losing ground to both Nokia and Samsung, its market share sheered from 20.7% a year ago to 13.1% now.
 
When Eddie got to Motorola in January 2004 he lucked out and rode the tsunami created by the company’s new Razr phone, an invention of the ousted hereditary Galvin administration.
 
Razr sold a phenomenal 110 million units, more than any other cell phone in history. Motorola’s stock price was close to doubling by last October.
 
However, with Eddie in charge Motorola’s well of ideas went dry. It couldn’t come up with a follow-on, giving Apple, a computer company you might say, the opportunity to dictate what the next-generation of phones should look like, that is unless Google and its Android cotillion up and waltz away with the vision thing.
 
Motorola also hasn’t exploited its acquisition of Good Technology, whose enterprise e-mail software competes with RIM and its Crackberry.
 
Without a hot Razr replacement, Motorola in its last quarter last year sold cell phones at a loss to maintain market share. By January it had to drop its earnings forecast. That ushered in activist shareholder Carl Icahn and a bitter proxy battle over a board seat that Zander only narrowly won last spring.
 
Zander promised that Motorola would at least have a profitable year and started cutting costs. The company has so far canned 5,000 of the 7,500 people destined to get pink slips, including half the executives in its cell phone unit. However, though Moto returned to profitability at the end of October its fiscal third-quarter earnings were down 94% and with Zander handing in his notice yesterday it’s widely suspected his turnaround is a flop.
 
Boards don’t let CEOs go in the middle of a successful turnaround.
 
Enter Zander’s handpicked successor, Motorola president and COO Greg Brown, a guy who’s held those titles since March, basically as heir-in-waiting.
 
His reception has been tentative; Motorola’s stock rose all of 32 cents Friday. There’s concern that being close to Zander his appointment means more of the same. And Brown doesn’t have much more telecom experience than Zander. The market would have had more confidence in an outsider with a brand name, but miracle workers are in short supply.
 
Brown joined Motorola in 2003 from Micromuse, the network management software where he was CEO before IBM bought it.
 
At Moto Brown was instrumental in its $3.9 billion acquisition of Symbol Technologies, the Long Island barcode scanner and handheld computer people, and in Motorola’s $1 billion divestiture of its flagging automotive electronics unit.
 
His credentials suggest he might put more effort into Motorola’s $8 billion enterprise mobility arms. However, Brown indicated his top priority is to fix Motorola’s broken phone business, responsible for roughly half of the company’s $39 billion a year in sales.
 
Its sales are now down 36% and it ran a $138 million operating loss in Q3, not as bad as the $264 million it lost in Q2.
 
Then of course there’s the little matter of Moto’s stock being down 40% to roughly about where it was when Zander took over.
 
Brown’s recovery plans are supposed to be unveiled early next year after Zander’s resignation takes effect January 1.
 
Icahn, who’s upped his stake in the company to about 3%, issued a statement yesterday saying that Zander’s leaving was “long past due” but doesn’t “even begin to address the major problems at Motorola.”
 
He thinks it should be split into four separate companies: “a mobile devices company, an enterprise mobility company; a connected home company and a company focused on mobile networks infrastructure” and he thinks the mobile devices’ business should be standalone.
 
The Wall Street Journal, whose front page last April quoted Zander as saying “I love my job; I hate my customers,” says private equity firms have approached Motorola regularly this year about buying the company or part of it, offers Sun would dearly appreciate long about now.
 
Zander will remain chairman until the stockholders meeting in May then step down from the board. He’ll be an adviser to the new CEO until his contract runs out on January 5, 2009.
 
He will draw his pay next year but because he’s stepping down voluntarily he misses out on a possible $35.6 severance package for getting fired. However he’s still going to see about $16 million.
 
It’s unclear how involved Zander’s been in Motorola lately. He said yesterday he has been negotiating his departure with the board for the past few months. And interim CFO Tom Meredith, Dell’s former CFO drafted off Moto’s board, seems to have been calling a lot of the shots lately. Meredith claims the mobile phones unit will return to profitability next year.

More Stories By Maureen O'Gara

Maureen O'Gara the most read technology reporter for the past 20 years, is the Cloud Computing and Virtualization News Desk editor of SYS-CON Media. She is the publisher of famous "Billygrams" and the editor-in-chief of "Client/Server News" for more than a decade. One of the most respected technology reporters in the business, Maureen can be reached by email at maureen(at)sys-con.com or paperboy(at)g2news.com, and by phone at 516 759-7025. Twitter: @MaureenOGara

Comments (1) View Comments

Share your thoughts on this story.

Add your comment
You must be signed in to add a comment. Sign-in | Register

In accordance with our Comment Policy, we encourage comments that are on topic, relevant and to-the-point. We will remove comments that include profanity, personal attacks, racial slurs, threats of violence, or other inappropriate material that violates our Terms and Conditions, and will block users who make repeated violations. We ask all readers to expect diversity of opinion and to treat one another with dignity and respect.


Most Recent Comments
Ron Sweitzer 12/01/07 12:51:33 PM EST

Sony CEO Howard Stringer should have been fired before Zander. Both Zander and Stringer are the two most incompetent CEOs in history. Zander did not even have an email account while running Sun. I would receive an instant reply from McNeally on a Sunday afternoon, but waited until Monday to talk to Zander.

IoT & Smart Cities Stories
Cloud computing delivers on-demand resources that provide businesses with flexibility and cost-savings. The challenge in moving workloads to the cloud has been the cost and complexity of ensuring the initial and ongoing security and regulatory (PCI, HIPAA, FFIEC) compliance across private and public clouds. Manual security compliance is slow, prone to human error, and represents over 50% of the cost of managing cloud applications. Determining how to automate cloud security compliance is critical...
Enterprises have taken advantage of IoT to achieve important revenue and cost advantages. What is less apparent is how incumbent enterprises operating at scale have, following success with IoT, built analytic, operations management and software development capabilities - ranging from autonomous vehicles to manageable robotics installations. They have embraced these capabilities as if they were Silicon Valley startups.
"MobiDev is a Ukraine-based software development company. We do mobile development, and we're specialists in that. But we do full stack software development for entrepreneurs, for emerging companies, and for enterprise ventures," explained Alan Winters, U.S. Head of Business Development at MobiDev, in this SYS-CON.tv interview at 20th Cloud Expo, held June 6-8, 2017, at the Javits Center in New York City, NY.
Recently, REAN Cloud built a digital concierge for a North Carolina hospital that had observed that most patient call button questions were repetitive. In addition, the paper-based process used to measure patient health metrics was laborious, not in real-time and sometimes error-prone. In their session at 21st Cloud Expo, Sean Finnerty, Executive Director, Practice Lead, Health Care & Life Science at REAN Cloud, and Dr. S.P.T. Krishnan, Principal Architect at REAN Cloud, discussed how they built...
When talking IoT we often focus on the devices, the sensors, the hardware itself. The new smart appliances, the new smart or self-driving cars (which are amalgamations of many ‘things'). When we are looking at the world of IoT, we should take a step back, look at the big picture. What value are these devices providing. IoT is not about the devices, its about the data consumed and generated. The devices are tools, mechanisms, conduits. This paper discusses the considerations when dealing with the...
Bill Schmarzo, author of "Big Data: Understanding How Data Powers Big Business" and "Big Data MBA: Driving Business Strategies with Data Science," is responsible for setting the strategy and defining the Big Data service offerings and capabilities for EMC Global Services Big Data Practice. As the CTO for the Big Data Practice, he is responsible for working with organizations to help them identify where and how to start their big data journeys. He's written several white papers, is an avid blogge...
Business professionals no longer wonder if they'll migrate to the cloud; it's now a matter of when. The cloud environment has proved to be a major force in transitioning to an agile business model that enables quick decisions and fast implementation that solidify customer relationships. And when the cloud is combined with the power of cognitive computing, it drives innovation and transformation that achieves astounding competitive advantage.
Machine learning has taken residence at our cities' cores and now we can finally have "smart cities." Cities are a collection of buildings made to provide the structure and safety necessary for people to function, create and survive. Buildings are a pool of ever-changing performance data from large automated systems such as heating and cooling to the people that live and work within them. Through machine learning, buildings can optimize performance, reduce costs, and improve occupant comfort by ...
René Bostic is the Technical VP of the IBM Cloud Unit in North America. Enjoying her career with IBM during the modern millennial technological era, she is an expert in cloud computing, DevOps and emerging cloud technologies such as Blockchain. Her strengths and core competencies include a proven record of accomplishments in consensus building at all levels to assess, plan, and implement enterprise and cloud computing solutions. René is a member of the Society of Women Engineers (SWE) and a m...
JETRO showcased Japan Digital Transformation Pavilion at SYS-CON's 21st International Cloud Expo® at the Santa Clara Convention Center in Santa Clara, CA. The Japan External Trade Organization (JETRO) is a non-profit organization that provides business support services to companies expanding to Japan. With the support of JETRO's dedicated staff, clients can incorporate their business; receive visa, immigration, and HR support; find dedicated office space; identify local government subsidies; get...