Motorola Inc. bowed to investor clamor for an outsider with the appointment of former Sun Microsystems Inc. president Edward Zander as the new helmsman, officially ending the reign of the Galvin family.
Zander, most recently of private equity company Silver Lake Partners, edged out Motorola President Mike Zafirovsky, who was the strongest internal candidate for the job.
Noting that his new responsibility is a challenge, Zander said he looks forward to making the vendor “the definitive industry force for today as well as the next global generation.”
The position has been vacant since Chris Galvin resigned as the company leader in September over disagreements with members of the board on managerial vision.
Zander’s choice could inject new blood into a company that has not only lost its premier position as a handset maker, but has lagged in infrastructure, semiconductors and a number of other areas.
“He seems full of energy and enthusiasm,” remarked Jane Zweig, chief executive officer of the Shosteck Group, adding that he will bring his skill in software to the company at a time when industry is gravitating remorselessly toward software in both devices and infrastructure. Zander is also expected to bring his expertise in innovative technology from Silver Lake, said Zweig.
She noted that although Zander does not have much experience in devices, software has become a critical part of handheld development.
Motorola has lost ground to some of its more aggressive and innovative competitors like Samsung Electronics Co. Ltd., Siemens AG and LG Electronics. Zafirovsky, fondly called “Mike Z,” will continue to handle the handset areas as chief operating officer.
In the fashion of Lucent Technologies Inc., which spun off Agere Systems Inc., and in what might be the first stamp of Zander’s leadership, Motorola filed with the Securities and Exchange Commission for a $2 billion initial public offering to spin off its semiconductor unit, as previously announced.
The new company, which bears the temporary name of SPS Spinco, was first announced in October. The definitive name will be announced before the real offering, said the company.
The new company is expected to be one of the top semiconductor companies in the world and will do battle with such bellwethers as Intel Corp., Texas Instruments and STMicroelectronics.
The unit was the only major part of Motorola to suffer an operating loss in the third quarter. The company needs it to fly high to enhance the profile of the handset division.
Motorola said it would own all outstanding Class B shares after the IPO and distribute all its ownership to its common shareholders in a tax-free spinoff by the end of next year.
“Completion of the distribution is contingent upon the satisfaction or waiver of a variety of conditions, including among other things, the receipt of a favorable tax ruling from the IRS and/or a favorable opinion of Motorola’s tax advisor as to the tax-free nature of the distribution for U.S. federal income tax purposes,” said the company. “As a result, the distribution may not occur at the contemplated time and may not occur at all.”
The unit, which came into being in 1953, went through a series of cost-cutting measures that included a workforce slash of about 11,000 staff. It now has 23,000 workers and has reduced its facilities to 10 from 22.
Zweig said Zander’s appointment is not a vote against Zafirovsky, but a deference to investor’s desire for an outsider. Zafirovsky has demonstrated an intention to work with the new CEO.
“Ed brings a wealth of experience to Motorola, and I believe that working together we can build upon Motorola’s impressive legacy to continue to be a global leader in technology and communications,” said Zafirovsky.
Zander worked for Sun for 15 years and served as president and COO until June 2002. He is credited with growing Sun to $18 billion in revenues, making it a stellar supplier in the infrastructure market.
He “oversaw the development and marketing of Solaris and led Sun’s network management, PC integration and software product suites,” said Motorola.
Zweig said the new helmsman will have to take a hard look and decide whether to take an integrated approach or decide what parts of the company will work.
“I don’t expect him to have all the answers,” she said. “He should do what makes sense.”
