Ed Zander replaced at struggling Motorola

Ed Zander will step down as CEO of Motorola at the end of the year as the company battles with declining revenue and profit.

Motorola announced Friday that Greg Brown, 47, its president and chief operating officer, will take over from Zander on Jan 1. Zander, 60, will continue as the company’s chairman until its shareholder meeting in May, Motorola said.

“Next year marks my 40th year in the technology industry,” Zander said in a statement. “This is the right time for me to move on to the next phase in my life and spend more time with my family.”

The Schaumburg, Illinois, company has struggled this year in the mobile phone market, which accounts for about half of its business. The company launched its popular Razr device a few years ago, but since then has failed to produce a successor that captured the public’s imagination.

Just this week, research company Gartner said Motorola’s share of the mobile phone market slid to 13 percent in the third quarter, down from 21 percent last year, and Motorola lost its second-place standing to South Korea’s Samsung Electronics.

Motorola reported net sales of US$8.8 billion for its third quarter, down from $10.6 billion a year ago. Net earnings were $60 million, down from $968 million in the same quarter a year earlier.

“Everybody’s been waiting for this to happen for at least six months so it’s not a big surprise,” said Carolina Milanesi, Gartner’s research director for mobile devices.

Zander shouldn’t be judged harshly for his term at the company, she said. He did much to turn Motorola around when he first joined, streamlining operations and getting new products like the Razr to market more quickly.

“He did a lot at the beginning to get Motorola where it got to, and things didn’t work out necessarily as he planned after that,” she said. “There may have been a feeling of complacency at the company generally, enjoying the success and not thinking far enough ahead.”

Zander became CEO in January 2004. He was previously managing director at Silver Lake Partners, and before that was the long-time president and COO of Sun Microsystems.

Brown is a natural successor, since he was already charged with reinvigorating Motorola’s handset business. One challenge will be to focus the company’s phone software strategy, which currently includes the UIQ interface; Windows Mobile; the Limo Foundation’s Linux platform; a home-grown Linux platform; and, soon, Google’s Android mobile phone platform.

Motorola has talked to analysts about some attractive new handsets planned for the second half of next year, according to Milanesi, but it’s likely to be 2009 before the company can return to its former strength, she said.

Brown has been president and COO of Motorola since March, and led various divisions of the company since joining in 2003. Before that he was chairman and CEO of Micromuse, a network management software company.

Editor’s note: Analyst comments added.

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