The head of Motorola Inc's cellphone business resigned on Friday, focusing new attention on a division whose performance has faltered after two years of success fueled by Razr handsets.
The company announced Ron Garriques' departure in a terse news release just before Dell Inc, the world's second-largest computer maker, named him president of a newly created global consumer division.
Motorola, based in Schaumburg, Illinois, declined to say whether Garriques was leaving as a result of the missed profit forecasts and acknowledged pricing errors that have caused the firm to lose favor with investors and analysts.
It named Ray Roman, senior vice president of global sales, and Terry Vega, senior vice president of global devices, as interim co-heads of the cellphone business.
Asked if Garriques was encouraged to leave, spokesman Paul Alfieri said: "All I can tell you is that he resigned and we did not make a counteroffer to retain him."
Garriques took over as head of the firm's mobile devices business in September 2004, just as its trendsetting Razr was about to create a sensation on the global market, reviving Motorola's fortunes after years of sluggish results. After joining Motorola in 1998, he had headed cellphone operations in Europe, the Middle East and Africa.
But the business stumbled the past two quarters, disappointing Wall Street as the company lowered the Razr's price in a bid to extend its market-share gains, but saw profit margins eroded and momentum lost to competitors. Successors to the Razr have failed to match the ultra-slim phone's success.
Last month, the world's No. 2 cellphone maker said it was cutting 3,500 jobs and taking other steps to reduce costs after misjudgments on pricing and sales forecasts for its high-end phones contributed to its least profitable quarter since 2004.
Starting tomorrow, Garriques will become president of Dell's consumer business. Dell hopes to expand sales in developing markets such as China and India.
The move is the latest in a series of changes in Dell's executive ranks since founder Michael Dell took back the CEO's duties last month, replacing Kevin Rollins. Dell has struggled with slowing growth, disappointing earnings, shareholder lawsuits and a federal probe.
"We learned of this decision this morning and announced it as quickly as possible," Alfieri said after Motorola issued the release. "We're still pulling together exactly how we're going to go about filling the position."
Morningstar analyst John Slack said it was plausible that Garriques was forced out, but he also may have just wanted to move on.
"He had a pretty heavy hand in turning around the handset business the first time around," he said. "So I don't know if it's a matter of exhaustion or wanting to go for a new challenge. ... There might have been disagreements or friction in the executive suite."
Ittai Kidron of CIBC World Markets said Garriques' resignation doesn't change anything for Motorola in the near term.
"We believe the handset group faces several well-documented challenges over the next six to 12 months in refreshing Motorola's product lineup to address a more difficult competitive landscape," the analyst said in a report to investors. "Although the temporary management hole adds uncertainty and could be a bit of a distraction as employees await word of the permanent replacement, we believe most investors will look at it as a window of opportunity for change."
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