Motorola Inc. on Monday tapped Qualcomm Inc. executive Dr Sanjay Jha to run its ailing wireless-handset division as a prelude to the planned spin-off of the unit in mid-2009. The stock, which has declined 45 per cent over the year, rose as much as 10 per cent after the announcement.
The 45-year-old Jha, a 14-year Qualcomm veteran, has served as chief operating officer at the American giant since late 2006. He had joined the company in 1994 and helped it overtake Texas Instruments Inc. as the world's biggest maker of chips for mobile phones last year. He holds a doctorate in electronic and electrical engineering.
"Sanjay's technical expertise and industry experience make him ideally suited to lead mobile devices," board chairman David Dorman said in a statement. Jha will oversee the mobile devices division, which accounts for about 40 per cent of Motorola's revenue.
Motorola has spent months searching for an executive to run its handset division, with several top candidates reportedly spurning the job. At the same time, the company had been hit by a spate of high-profile resignations, including two successive chief technology officers. (See: Motorola's chief strategy and technology officer becomes the latest senior executive to quit)
The hiring of Jha appears to commit the company to the spin-off under mounting shareholder pressure, which is expected to take place next year. (See: Motorola to split into two companies – mobile devices, and broadband and mobility solutions)
Jha, a Ph.D. in electronic and electrical engineering from the University of Strathclyde, Scotland, was also named co-chief executive of Motorola and will report directly to the board.
Current CEO Greg Brown will run the vendor's other two businesses - networking and public safety. He announced plans to split the phone unit from the rest of the company this year and last week said the division would occur in the third quarter of 2009. India's Videocon has been named as one of the possible buyers. (See: Videocon in talks to acquire Motorola's handset business)
Jha faces a daunting task in trying to turn around Motorola's handset division and help it recover from arguably its worst crisis ever. The company has fallen to third place globally - barely fending off No. 4 LG Electronics of Korea - and seen its share of the market fall to 9.5 per cent from nearly 24 per cent two years ago.
The unit has lost more than $1.9 billion since the start of last year as customers fled to competitors such as Nokia and Apple. Even the temporary respite offered by the Motorola RazR has proved to be just that – temporary. In the second quarter, the loss at Motorola's handset business widened to $346 million from $332 million a year earlier. Revenue at the unit fell 22 per cent to $3.3 billion.
Last week, Motorola surprised Wall Street with a small second-quarter profit, propped up by its home-entertainment and public-safety units as well as improved cost controls. The stock climbed 91 cents to $9.72 in early pre-market New York Exchange composite trading. Qualcomm fell $1.32 to $54.15 on the NASDAQ.
Len Lauer, 51, will replace Jha as operations chief, Qualcomm said today in a separate statement. Before his promotion, Lauer was an executive vice president at Qualcomm, overseeing the services business. He also worked at Sprint Nextel Corp. and International Business Machines Corp. before joining the chipmaker.
(Also see: Motorola and the limits of Six Sigma)