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Motorola Shares Rise on CEO's Exit

Cell phone maker's stock climbs 9% on optimism that a new chief executive may revive stagnant sales.

September 23, 2003|From Associated Press

CHICAGO — Wall Street cheered the end of Christopher Galvin's disappointing tenure as chairman and chief executive of Motorola Inc., elevating the stock Monday to its highest level in more than a year amid a raft of upgrades.

Even before a successor is named, analysts forecast the sale of one or more of Motorola's struggling business lines and other restructuring moves they said are needed to reinvigorate the lumbering wireless giant.

Shareholders signaled their eagerness for change by driving up the stock 97 cents, or 9%, to $12.06 -- its highest closing price since Sept. 11, 2002. Volume was about 65 million shares, five times the daily average, making it the most active issue on the New York Stock Exchange.

Industry experts were divided on whether the cell phone and semiconductor maker would go outside for its next leader or promote its highly regarded president and chief operating officer, Mike Zafirovski, who is untested as a CEO.

But the strong consensus among analysts was that Motorola's recovery efforts haven't paid off sufficiently and that it was past time to sever ties with Galvin -- grandson of Paul V. Galvin, who co-founded the company 75 years ago. Galvin had taken the company through two restructurings, most recently a two-year overhaul, which slashed nearly 60,000 jobs, with mixed results.

"We continue to believe that many of the strategic missteps over the past several years are the direct result of Chris Galvin's leadership," Dale Pfau of CIBC World Markets said.

Motorola announced late Friday afternoon that Galvin had decided to retire because of differences with the board of directors over the company's turnaround. Spokeswoman Jennifer Weyrauch said Monday that the search for a replacement was continuing and that the Schaumburg, Ill.-based company had no further comment.

The cell phone company has been unable to narrow the huge gap with market leader Nokia, and other competitors are creeping closer to it.

In addition, Motorola's once-powerful semiconductor division has fallen off the list of the world's top 10 chip makers this year.

Many shareholders and analysts have said Motorola should sell its struggling chip division. Divestiture is considered a likelier option under a new chief executive.

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