Motorola Investors Say Brown May Not Restore Cachet

Greg Brown takes over the top spot at Motorola Inc. boasting 25 years in the technology industry and a resume stacked with operations expertise. That's precisely why some investors wanted someone else.

The decision last week to replace Ed Zander with Brown, Motorola's current president, continues a tradition of leaders who know how to run the mobile-phone maker's manufacturing and distribution. Shareholders may have preferred a chief executive officer who can excite customers and employees with new products that juice up sales.

Zander, a former engineer, couldn't do that and Brown, trained as an economist, may have the same problem, said Joan Lappin, a fund manager who had called for Zander's ouster.

``I don't see him as a person who is going to come in and razzle-dazzle the troops,'' said Lappin, president of Gramercy Capital Management in New York. She sold her Motorola shares last year and isn't buying them back. ``He's kind of a bland guy.''

Zander, 60, will step down in January after he failed to produce a successful follow-up to the Razr, now three years old and Motorola's best-seller. That led to three quarters of falling sales and market share losses. Brown, 47, faces the challenge of luring customers away from Apple Inc.'s iPhone, Research In Motion Ltd.'s BlackBerry, and new music and video devices from Nokia Oyj and Samsung Electronics Co.

`Disappointed'

``There are some investors who are disappointed that they didn't bring in somebody from the outside,'' said Raimundo Archibold, an Kaufman Brothers LP analyst in New York. He recommends buying Motorola shares and owns them himself. ``This would have been an opportunity to bring in some fresh blood.''

Brown has marketing experience from his time at AT&T Inc., where he worked more than 20 years ago. He also oversaw marketing as head of four Motorola business units, spokesman Chuck Kaiser said.

In an interview, Brown said the top challenge is to ``regain the momentum'' of the handset business. ``We've got to get that organization more profitable, refresh the product portfolio.''

Motorola, in Schaumburg, Illinois, rose 32 cents to $15.97 Nov. 30 on the New York Stock Exchange after announcing the decision, and slid 19 cents to $15.78 at 9:34 a.m. New York time today. The shares had fallen 22 percent this year before today.

The stock would have advanced more had Motorola picked an outsider, said Brad Williams, an analyst at MTB Investment Advisors in Baltimore. Apple and Waterloo, Ontario-based Research In Motion have more than doubled this year. Nokia has climbed 76 percent.

While Motorola started selling a new version of its Razr device, the handset was too similar to the old design to entice shoppers, analysts said. Motorola said last month that it had sold 900,000 units of the new Razr.

IPhone, BlackBerry

``Brown is not what they're lacking right now,'' said Williams at MTB, which manages $11 billion. His company sold its Motorola shares this year. ``He is not a product-marketing type of person. Look at Apple and RIM, who have more of a consumer focus.''

Williams said he won't buy Motorola stock until the company brings out ``great new products'' and moves beyond the Razr.

At Apple, Steve Jobs continually reinvents his products with new designs and features. Sales of the iPod and iPhone have helped the Cupertino, California-based company eclipse Motorola in market value since Jobs retook the CEO job 10 years ago.

Apple's iPhone, which blends the iPod media player with a Web-browsing mobile phone, sold more than 1.4 million units in three months after its debut in June. Research In Motion, which introduced the BlackBerry Curve video and music phone in May, more than doubled its total sales last quarter. Nokia's N95 camera phone and music devices from Samsung and Sony Ericsson Mobile Communications Ltd. stole sales in Europe and Asia.

Nokia's Lead

Nokia, based in Espoo, Finland, lifted its market share to 38.1 percent of unit sales in the third quarter from 35.1 percent a year earlier, according to Stamford, Connecticut-based research firm Gartner Inc. Samsung rose to 14.5 percent from 12.2 percent, while Motorola fell to 13.1 percent from 20.7 percent.

Motorola should have given ``a very careful look at external candidates'' to revitalize the company, said Paul Meeks, director of research for L.R. Burtschy & Co., a family-owned fund in Charleston, South Carolina. The fund manages $600 million and won't buy Motorola shares until Brown improves results.

``It's more of the same old, same old, with an internal instead of an external candidate,'' he said.

Operations Skills

Brown proved his operations-management skills by producing consistent earnings at Motorola's network division in a time of shrinking customer spending, said Lawrence Harris, an analyst at Oppenheimer & Co. in New York.

He also arranged the $3.9 billion purchase of Symbol Technologies, the second-largest transaction in Motorola's history, and returned the automotive business to profitability before selling it for $1 billion.

Brown will need to hire new talent and build design and marketing teams to develop products that consumers want, said Robert Forman, a partner at executive search firm CTPartners in Menlo Park, California.

``Brown understands how to build things,'' he said. ``He also understands how to distribute products. There might have been another CEO that could have been more consumer-driven.''
(Source bloomberg.com)