After a couple of very good years as the new C.E.O. of Motorola, Ed Zander was kicked around like a Hacky Sack in 2007. He had been plucked from Silver Lake, the tech-savvy private equity shop he'd joined after a long run as the No. 2 at Sun Microsystems. He was brought into Motorola to engineer a turnaround in 2004; in short order, he succeeded. Within a few months, the company introduced the ultraslim Razr mobile phone, selling more than 100 million units to date. This helped restore Motorola's cool image and make it profitable again. At the end of 2006, though, Zander was in danger of being disconnected. The company missed the industry's quick shift to higher-bandwidth 3G smart phones and had to cut prices to get rid of suddenly antiquated models. Motorola reported a $181 million loss in the first quarter this year, and its stock dropped into the teens, making activist investor Carl Icahn very unhappy. Icahn, who has at least a 2.9 percent stake in the company, was pushing to get Zander fired, or at least roast his chestnuts over an open fire. Zander survived but in October was pilloried in the press for not grabbing digital-map company Navteq, which Nokia bought for more than $8 billion. Condé Nast Portfolio's Kevin Maney interviewed Zander at the University of Chicago Graduate School of Business on October 8. An edited transcript of their conversation follows. (View a slideshow of Motorola's newest gadgets.)

CNP: What went wrong for Motorola this year?

Zander: There was a disruptive technology called 3G. We underestimated when it would hit—thought we had another year—and we were late rolling out our products that use it. But in this business, you have to get the devices out across the world and in all price points. That's what were doing right now.

CNP: The stock price falls, and you have one of those classic nightmare moments: Your assistant walks into your office and says, "Carl Icahn's on line 1."

ZANDER: [Smiles] He wasn't on line 1. He was on my cell phone.

CNP: What did you talk about?

ZANDER: I don't want to go into that. I'll just say that last December we realized the products we had weren't what customers wanted, so we had to cut prices. And that was a big hole in our January earnings announcement. At the end of the month, I got a phone call from Mr. Icahn. It was surreal.