Updated: Motorola CEO steps down

Motorola today announced that Chief Executive Officer Edward Zander will step down from office, effective January 1. Zander will continue to serve as chairman of the board until the company's annual shareholders meeting in May 2008. Greg Brown, who has served as Motorola’s president and chief operating officer since March, will succeed him as the new CEO.

According to Motorola, Zander will continue to serve out his employment contract as a strategic advisor to the new CEO – a nonofficer – through January 5, 2009. Zander joined the company in 2003, after serving as CEO of Sun Microsystems, to replace Christopher Galvin, the grandson of the company’s founder.

Zander is credited with reviving the company with the launch of the popular Razr phone; however, the company’s sales have been on the decline after it came off a two-year bout with Razr-induced success. Motorola has since fallen to third place in the cell phone market following Samsung Electronics and undisputed leader Nokia. Last month, Motorola reported a 94% decline in third-quarter profit and its biggest division, cellular phones, saw quarterly sales plunge 36% to $4.5 billion with an operating loss of $138 million – a figure that is nearly $1 billion worse than a year ago.

Pressure on Zander also increased when billionaire investor Carl Icahn challenged him for a seat on the board. Zander won the battle, but Icahn said he'd push for his resignation if the business didn't improve by year-end.

The departure comes as little surprise, as Motorola began laying the groundwork for Zander’s replacement when Brown was promoted to the COO spot in March, Gartner analyst Bill Clark said. But Brown will face his own set of challenges, Clark said. He is inheriting a business that focused too long and too hard on making specific handsets to meet individual carrier needs rather than building a sustainable and consistent phone product line under the Moto name, Clark said.

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