Motorola's hunt for a miracle worker
The wireless giant's handset business needs a genius to turn itself around.
NEW YORK (Fortune) -- HERO WANTED: No. 3 player in hot market needs thick-skinned CEO for a salvage and rescue job.
Okay, so that's not quite the ad that wireless giant Motorola is running these days at it searches for a new chief for its mobile phone business - but it might as well be. Broken, leaderless and bleeding red ink, Motorola's handset unit is about to be spun off so the rest of the company can prosper.
It's been a rough tumble for the Schaumburg, Ill. wireless titan that 10 years ago sat atop the cell phone industry. Each week seems to bring new lows in the stock and a yawning absence of new products to pin hopes on. Just how low the phone maker has fallen was apparent recently when a leading Indian appliance manufacturer signaled its interest in buying the division.
Last month, Motorola (MOT, Fortune 500) set out to find a new CEO for its mobile phone business after Greg Brown was named head of the entire company. While Motorola isn't publicly talking about its search, it begs an obvious question: Who could possibly want this gig? Talk about a seemingly hopeless assignment - one that only a fool would accept.
The challenges facing Motorola's mobile phone business are daunting. The company has been unable to capitalize on its blockbusters, most recently the Razr, the ultra-thin folding phone that was introduced in 2005 and eventually sold more than 100 million units. Last year Motorola lost the No. 2 slot to South Korea electronic giant Samsung - and risks losing its third place ranking to Sony Ericsson.
Brown said in late March he would spin off Motorola's handset unit to shareholders sometime next year after a bruising battle with corporate raider Carl Icahn, who had amassed a 6.5% stake in the company and was agitating for change. But a breakup alone won't solve Motorola's main problem: making popular phones that churn out steady profits, which is a challenge that experts say require a top-to-bottom overhaul of the company. The toxic situation would understandably repel all but the hardest chargers.
But where some see a fool's task, others see a huge opportunity for a fix-up specialist. And a few names have surfaced as potential candidates that could engineer a turnaround - although, as some analysts and industry observers note, engineers need not apply for this job (more on that later).
Here are some contenders, in no particular order:
- Anssi Vanjoki, the new markets chief at Nokia (NOK). Vanjoki is widely credited with extending Nokia's brand around the world and developing advanced mobile phones with more applications. While thoroughly Finnish - he is, according to his official bio, a Knight, 1st Class, of the Order of the White Rose of Finland - Vanjoki has worked stateside while at 3M earlier in his career.
- Steve Altman, the president of Qualcomm (QCOM, Fortune 500). Altman is a patent attorney that helped turn Qualcomm technology licensing business into a royalty collection powerhouse.
- Dan Akerson is a former top executive with MCI, Nextel, XO, and now at Carlyle Group. Akerson is an experienced telco hand who would conceivably help warm up relations between Motorola and its phone company partners.
- Ed Breen ran General Instruments, which was purchased by Motorola in 2000 and is now credited with reviving Tyco after a potentially fatal accounting scandal earlier this decade.
- Mike Zafirovski is the one-time No.2 at Motorola who's now trying to turn around Nortel (NT). After more than two years, and almost nothing to point to as a sign of recovery, Zafirovski could be ready to return to the mother ship
- Ron Garriques, the former Motorola handset chief who fled to Dell (DELL, Fortune 500) during Razr's fall from popularity, could attempt a triumphant return. No one knows the workings inside Motorola's phone shop better than Garriques, but his role in creating it might work against him.
- Bill Nuti, a turnaround artist who left Cisco to revive Symbol Technologies. Nuti left Symbol to take the top job at NCR. Symbol was acquired soon after by Motorola.
- Ben Verwaayen, the former Lucent chief operating officer who's just spent six years modernizing British Telecom, where he added business services and data network management to the telco's core residential phone business. Verwaayen is stepping down from BT in June.
To succeed, the head of Motorola's cell phone business will have to address the inefficiencies that the Razr's rise and fall unmasked. In part that means taking an entirely new approach to phones. Motorola previously prized engineering over all else, thinking it could design its way out of any rut. But Motorola can learn from Apple (AAPL, Fortune 500) and other companies that consistently develop and market products that appeal to consumers.
Viewed from that angle, here are two possible contenders who might just fit the bill: Irene Rosenfeld, the Kraft CEO who has the packaging and marketing expertise Motorola could use. There's also Indra Nooyi, the chief of beverage giant PepsiCo and a true believer in the need for companies to constantly reinvent themselves - something Motorola desperately needs.