What Can Brown Do for Motorola?

(page 2 of 2)

In his interview, Brown suggested that the current plan of attack is working, if slowly. He noted releases of the Q smartphone, the Razr2, a refresh of the Rokr music phone, and a group of low-end phones with improved software. "That is a good thing, but we need to add more," he told BusinessWeek. "Still, it's not like we're standing still. It's that more needs to be done."

Much more. Motorola's market share shrank to 12.4%, from 13%, in the fourth quarter. First-quarter handset shipments and sales are expected to be down significantly from the fourth quarter, greater than the typical 10% to 15% decline, Brown told analysts. Oppenheimer's Kidron estimates shipments will fall more than 19%. Analysts expect most of that share to go to Finland's Nokia.

Extreme Action

Brown is likely to put his stamp on the recovery by reshuffling management. He recently hired a new head of human resources, signaling more employee turnover may be in the offing. Motorola Chief Financial Officer Thomas Meredith, a board member who stepped into management to help former CEO Ed Zander, might also be replaced once his current contract expires, Kidron wrote in a recent report.

Recovery becomes immensely tougher in the face of a weakening global economy. Motorola will have to move product when demand is softening from fear of recession. In everybody's book, such a market favors the leader, not the laggard. "I think it will be the rich get richer if there's a recession," says Robert Laikin, CEO of Brightpoint, a major distributor of Motorola and Nokia phones. In a weak economy, "[Nokia] will continue to dominate this space."

That's why some think Brown needs to shake things up. At less than $10 a share, the market is saying there's little value to Motorola's once-celebrated handset business, never mind the rest of the company. Brown would not bite when asked whether he might change the phone unit's business model, perhaps moving manufacturing overseas and slapping the Motorola brand on phones. Nor would he say whether a breakup of the company is necessary. "Our primary focus is on profitability and improvement…in mobile devices and other businesses," is as much as he was willing to say. Investors already want to hear—and see—more.

Crockett is deputy manager of BusinessWeek's Chicago bureau .