Motorola: Maybe the Problem Isn't Zander

When I thought about it for 2 seconds, I realized that Motorola has been kind of a well-disguised mess for a long time. Ed Zander, who said today he's stepping down as Motorola CEO, certainly didn't create the mess. The main criticism he deserves is that he didn't ultimately fix the mess. I wonder if anybody can.

The company has had five CEOs in 20 years: Robert Galvin (as son of the founder, Bob Galvin built the modern Motorola into a major company); George Fisher, Gary Tooker, Chris Galvin (son of Robert) and Zander. That in itself suggests a problem. These are not untalented men.

I was looking at Moto's stock history over that period. The company had two brief but remarkable runs. The first was from around 1990 to 1993 -- Fisher's years. The company rode the boom in pagers and was building many of the first cell phone systems. The stock went from $4.50 (split adjusted) in 1990 to $16 in '93. Great. Yet for the three years before (1987-90) the stock went up a total of $1 a share, and for the three years after (1993-96) it also went up just $1.

From 1996 to 1999, Moto had its other great run -- this time, riding the StarTAC phone and the cell phone boom, and of course the general tech and telecom stock craze. StarTAC came out in '96. Cell phone use in the US alone went from 5.2 million in 1990 to 55.3 million in 1997. (It's about 225 million now.) Moto stock, about $18 in November 1996, shot to nearly $40 three years later.

Then -- another bust. The stock dove to $11 in 2002. It climbed back to around $25 on the strength of the RAZR in 2005, and dropped off when Moto couldn't follow up the RAZR with another hit. Now the stock is around $16.

So basically, in 20 years Moto has had two hit products: StarTAC and the RAZR. It has had one truly major new product line: cell phones.

In the meantime, each CEO has gone through huge strategic blunders. Under Fisher, Motorola launched the Iridium satellite project -- now seen as a business boondoggle on a magnitude of Ford's Edsel. Under Tooker and Galvin, it missed the transition from analog cell phones to digital. Under Zander, it missed the transition from plain old cell phones to smart phones. Along the way, Motorola got into a bunch of stuff that didn't pan out so well, like the PowerPC chips and smart cards.

These past 20 years paint Motorola as a boom and bust company -- big swings, a lot of strikeouts, a couple home runs. Apparently, it's going to get rid of any CEO who whiffs a few times. Doesn't leave much time for fixing the mess.

Good luck to the new guy, Greg Brown. He's going to need it.

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