"I love my job. I hate my customers." What a quote from Motorola (MOT) CEO Ed Zander, picked up by The Wall Street Journal. If is the kind of statement a CEO cannot survive. Zander’s customers are the cell service companies like AT&T (T) and Verizon (VZ). They are big customers, and there are not many of them.
Add to Zander’s list of sins that Motorola never had a replacement for its popular RAZR phone, and the reasons for keeping him on as CEO drop to zero.
Carl Icahn is launching a series of newspaper ads today, aimed at getting him a seat on the Motorola board. In them Icahn says: "Motorola has stumbled, and stumbled badly." The statement has the unique benefit of being right.
Motorola’s stock is now approaching a two year low. At one point it was up 70% from where it traded 24 months ago. That increase in now only 10%. And, it could go lower if there is further evidence that the company’s sales of handsets are still dropping.
Icahn may not be someone investors would want to have over to dinner, but he has done well for shareholders at companies like MedImmune and Time Warner. He is right to see Zander’s management as Motorola’s Achilles heel. Zander came in about the time the RAZR was released and got to ride its success to glory. But, he did not write a second act.
If Icahn gets a seat on Motorola’s board, he will do what he can to force Zander out. With Zander’s track record, that makes sense.
But, Icahn has a problem. He may be a billionaire, but even he does not have enough money to buy the number of handsets Motorola would have to sell to get back on track. That is a problem Motorola cannot solve for some time.
Douglas A. McIntyre
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