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Follow UsYukari Iwatani
CHICAGO: Being a member of Motorola Inc.'s founding family may have helped
get Christopher Galvin the top post at the wireless technology giant, but these
days the name may feel more like a curse.
As the company suffers from a slowdown in telecommunications spending
compounded by management missteps a few years ago, investors are questioning the
chairman and chief executive's ability to lead the company his grandfather
founded. Some accuse Motorola of outright nepotism.
"Motorola is a public company not a monarchy," one shareholder said
to a smattering of applause at Motorola's annual shareholder meeting last week.
"The chairman is not in the same league as his father or his
grandfather."
The criticism is not new but Motorola's shareholder meeting demonstrated how
strong those sentiments remain with some investors as Motorola posted its first
operating loss in 71 years last year and suffered a 73 percent decline in stock
value in two years.
One analyst who declined to be named said a few big institutional investors
refuse to buy Motorola stock as long as Galvin is at the helm. "You have
quite a few buyside accounts who don't like him at all and a couple which will
never buy the stock as long as he's involved," the analyst said.
Big shoes to fill
To be sure, Galvin, 52, has big shoes to fill. His grandfather Paul Galvin
founded Galvin Manufacturing, which later became Motorola, in 1928 with $565 in
cash and $750 in tools and design to make radio equipment.
Paul Galvin grew sales to $177.1 million in 22 years, and by the time of his
death in 1959, Motorola had carved a name for itself in commercialized car
radios.
Galvin's father Robert Galvin was instrumental in turning Motorola into one
of the world's premier technology companies as the firm expanded into
international markets and invented the cell phone under his leadership.
"Being compared with his father is probably one of the biggest curses in
(Christopher's) life because that's such a high standard," said Nicholas
Negroponte, a board member of Motorola. "His father is one of the most
extraordinary men in the world," added the chairman of Massachusetts
Institute of Technology's media laboratory.
A hard worker
By all accounts, Christopher Galvin is a likable gentleman who cares deeply
about Motorola and its employees even though he can appear to be stiff in public
appearances.
The decision to cut 48,400 jobs, or nearly one-third of Motorola's peak work
force, since August 2000 is said to have been personally difficult for him, and
he sends out weekly e-mails encouraging employees and thanking them for their
hard work.
"The hard work you have demonstrated is just another example that
Motorola can be the best!" one e-mail said. He loves technology and any
speech he gives is usually accompanied by a show-and-tell of gadgets that he
pulls out of the pockets of his impeccably tailored suit.
A hard worker, Galvin rises at around 5 a.m. and rides his exercise bicycle
for about 30 minutes while reading newspapers and watching financial news on
television. He is usually in the office by 7 a.m. and works until 6 or 7 p.m.
When he travels, he is known to pull 17 hour days.
"Chris has worked very hard to be his own person," said a retired
Motorola employee and a friend.
Bringing in outside leadership
Galvin has been criticized in the past for his hands-off approach handed
down from his father, but he has worked to change that since the company fell
victim to the slowing economy two years ago. Instead of letting his executives
run the businesses, he now meets with his top executives on a weekly basis, four
times as often as in the past.
He has tried to show his decisiveness by cutting costs aggressively,
particularly in its cell phone and semiconductor businesses where Motorola
closed some plants. Some investors say Motorola could do more, but the firm
posted a narrower-than-expected loss in the first quarter. It expects to post a
profit in the third quarter and for the full year.
His biggest contribution, his supporters say, is the outside leadership that
he has brought in. Edward Breen, who was appointed president and chief operating
officer in January, was previously chairman and chief executive of settop box
maker General Instrument Corp., which Motorola bought in 2000. Mike Zafirovski,
president of Motorola's cell phone unit, came from General Electric Co.
Other executives have joined from Nike, Apple and Ingersoll-Rand. "Where
Chris distinguishes himself is by bringing in an A-team," Negroponte said,
noting that 20 percent of Motorola's senior executives come from outside of
Motorola. Still, some analysts say that no matter what he does, being a
"Galvin" may get in the way.
"If the company turns around, there will be a neutral stance to
him," Edward Snyder, an analyst with J P Morgan, said.
"In companies where relatives become executives, investors have asked,
'Is it possible that in a world of 6 billion people this is the best possible
guy to run the company and he happens to be related to the founder or CEO?' It
may be the case that he is, but unless the company consistently outperforms, you
will always be dealing with that question."