Motorolas mobile-phone division has been bleeding money since the start of 2007, reporting losses of $1.9 billion and falling to third in global sales. The company moved to turn things around Monday with the announcement that it is hiring a top executive away from Qualcomm to run the mobile-phone business.
Sanjay Jha will become co-CEO along with Greg Brown -- an announcement that sent Motorola stock up for the first time in more than four years. Under Jhas leadership, Qualcomm became the worlds top maker of chips for cell phones. Brown will be CEO of Motorolas healthier broadband business, which makes cable TV set-top boxes and wireless networking equipment. Brown had announced plans to split the company in March. The split division will occur in the third quarter of 2009.
Analysts hailed the move. "They needed someone high profile with engineering talent, and certainly this guy fits the bill," said Tavis McCourt, a Morgan Keegan & Co. analyst. "The only downside is that he doesnt necessarily have any consumer products expertise."
MEETING THE IPHONE CHALLENGE
Jhas first order of business: developing a device to compete with Apples best-selling iPhone. Motorola had a hit with the Razr, which sold more than 110 million units, but has been unable to come up with a follow-up product and has lost customers to Apple, Nokia and Samsung.
"In terms of actual products hitting the street, youre not going to see [Jhas] impact before 2010," McCourt said. "Probably his biggest impact will be the level and type of engineering talent he will attract to the company over time."
But Motorola will need more than just a winning phone, according to Tim Bajarin, principal analyst with Creative Strategies.
"Motorola will only be successful if this new team creates a complete solution that includes hardware, software and services similar to Apple," he said. "While the iPhone is a great phone, its real value comes from its software, applications and services."
Bajarin added, "Although creating slick phones is one part of the success equation, Apples success will force even traditional handset makers to think harder about the software and services angle if they are to really compete with Apple head on."
TREMENDOUS OPPORTUNITY
"Theres a tremendous opportunity here to take this business to the next level," Jha said. He will manage costs "aggressively" and hire a team experienced in branding and distribution. He wouldnt say, however, when the unit will become profitable.
Jha was a star at Qualcomm, where sales at the San Diego-based companys chip division soared 70 percent since he became executive vice president in 2004. Jhas contract with Motorola is initially for three years, and he will make at least $1.2 million in salary and get a bonus this year of $2.4 million.
Jha also receives equity totaling three percent of the mobile-phone unit after the company splits, consisting mostly of stock options. He will receive $30 million in cash if the split doesnt occur by Oct. 31, 2010.
Sanjay Jha will become co-CEO along with Greg Brown -- an announcement that sent Motorola stock up for the first time in more than four years. Under Jhas leadership, Qualcomm became the worlds top maker of chips for cell phones. Brown will be CEO of Motorolas healthier broadband business, which makes cable TV set-top boxes and wireless networking equipment. Brown had announced plans to split the company in March. The split division will occur in the third quarter of 2009.
Analysts hailed the move. "They needed someone high profile with engineering talent, and certainly this guy fits the bill," said Tavis McCourt, a Morgan Keegan & Co. analyst. "The only downside is that he doesnt necessarily have any consumer products expertise."
MEETING THE IPHONE CHALLENGE
Jhas first order of business: developing a device to compete with Apples best-selling iPhone. Motorola had a hit with the Razr, which sold more than 110 million units, but has been unable to come up with a follow-up product and has lost customers to Apple, Nokia and Samsung.
"In terms of actual products hitting the street, youre not going to see [Jhas] impact before 2010," McCourt said. "Probably his biggest impact will be the level and type of engineering talent he will attract to the company over time."
But Motorola will need more than just a winning phone, according to Tim Bajarin, principal analyst with Creative Strategies.
"Motorola will only be successful if this new team creates a complete solution that includes hardware, software and services similar to Apple," he said. "While the iPhone is a great phone, its real value comes from its software, applications and services."
Bajarin added, "Although creating slick phones is one part of the success equation, Apples success will force even traditional handset makers to think harder about the software and services angle if they are to really compete with Apple head on."
TREMENDOUS OPPORTUNITY
"Theres a tremendous opportunity here to take this business to the next level," Jha said. He will manage costs "aggressively" and hire a team experienced in branding and distribution. He wouldnt say, however, when the unit will become profitable.
Jha was a star at Qualcomm, where sales at the San Diego-based companys chip division soared 70 percent since he became executive vice president in 2004. Jhas contract with Motorola is initially for three years, and he will make at least $1.2 million in salary and get a bonus this year of $2.4 million.
Jha also receives equity totaling three percent of the mobile-phone unit after the company splits, consisting mostly of stock options. He will receive $30 million in cash if the split doesnt occur by Oct. 31, 2010.
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