Moto’s new co-CEO validates spin-off strategy

Thornton called the appointment a positive step for Moto as it removes an uncertainty regarding the turnaround of Motorola’s handset business and brings in much-needed leadership from a morale perspective. On top of that, Jha has the best shot of returning the company to profitability, he said, calling him a giant in the space with a strong technical background and strong relationships with the carriers already in place.

“The overall goal here is obviously to improve the feature set, the user experience of the devices, the time to market and the correct cost structure and price points of these devices,” Thornton said. “So the things that need to be accomplished are still the same, but obviously the stabilization in the business and expertise that he brings can only be viewed as positive.”

Thornton doesn’t anticipate the fact that Jha lacks direct experience in consumer products to be an impediment to his success in the role. The new CEO is likely to both stop the exodus of talent from the company as well as bring in new talent to Moto that can fill in the gaps, he said.

“Trying to find that balance of the technical and the behind-the-scene expertise coupled with the consumer-facing expertise is a hard balance, and there’s probably only a few candidates that could fit that bill,” Thornton said. “You can bring in and surround yourself with other talent that has that focus and expertise, and someone like Dr. Jha who comes from Qualcomm and has a lot of far-reaching relationships can stabilize the organization and morale.”

Thornton anticipates this ability to bring in new talent as one of Jha’s biggest potential impacts on Motorola. That being said, new products likely won’t come to market until 2009, concurrent with the time Moto is expected to bring on a broad array of 3G products using new Qualcomm and TI chipsets. “On the other hand, it remains to see what his impact will be on feature sets and form factor and the more consumer-facing topics,” he added.

Motorola, as a whole, posted surprisingly good earnings for the second quarter. The handset division, which has been struggling for the last few years, even shipped 28.1 million cell phones in the quarter, a full 27 million more than in the first quarter. Brown has served as CEO of Motorola since Ed Zander stepped down in January, as well as interim head of Mobile Devices since former CEO Stu Reed in March. At this time, the company also announced it would split into two publicly traded entities, with handsets independent from Moto’s core business, broadband and mobility solutions. On Thursday’s second-quarter earnings call, the company promised a third-quarter 2009 deadline for the spin-off. If the split is not complete by Oct. 31, 2010, Jha will get $30 million in cash.

Qualcomm executive vice president Len Lauer, Sprint’s former chief operating officer, will replace Jha as the new COO for the chipmaker. Steve Mollenkopf, executive vice president of Qulacomm’s CDMA Technologies unit, will fill Jha’s vacated role of president of the unit.