OT - MOT Monday May 7 9:24 PM ET
Motorola CEO Says Company on Track to Recover
SCHAUMBURG, Ill. (Reuters) - Motorola Inc.'s (NYSE:MOT - news) chairman on Monday calmly dealt with shareholder discontent over the company's shaky stock performance and his financial compensation, and said the No. 2 maker of cell phones is on the road to recovery.
Christopher Galvin, speaking at the company's annual meeting outside Chicago, responded to a several shareholder questions about the recent weak performance of Motorola's stock as well as a couple of complaints about his annual bonus in light of the technology giant's struggles. He said he hopes the company is the first technology firm to emerge from the current recession.
``We do have a major issue and that is our stock price is a disappointment in this environment,'' he told more than 600 shareholders, employees and reporters at a Schaumburg, Ill., hotel.
``There are certain factors in our control and those are the ones we are managing,'' he told reporters after the meeting. ''There are certain factors outside of our control that we have to manage through and around.''
Some analysts and investors have speculated recently on whether Galvin would be pressured to resign from his role as chairman and chief executive.
Motorola's stock is 73 percent off its record high and over the past year has underperformed the Standard & Poor's 500 index by about 50 percent. On Monday, it closed off 5 cents at $16.40 in New York Stock Exchange (news - web sites) trading.
Motorola reported its first operating loss in 15 years in the first quarter and has laid of thousands of workers. Its struggles reflect what has been occurring across the technology sector as other giants such as Cisco Systems Inc. (NasdaqNM:CSCO - news), Nortel Networks Corp. (NYSE:NT - news)(Toronto:NT.TO - news) and JDS Uniphase Corp. (Toronto:JDU.TO - news)(NasdaqNM:JDSU - news) have cut workers and talked of the slowdown's effects on business.
Discontent Over Ceo's Bonus
One Motorola shareholder at the meeting expressed discontent with Galvin receiving a bonus for last year, even if it was a decline to $1.25 million from $1.9 million in 1999. Galvin said the company achieved several targets it had set for itself, but nonetheless his bonus was still in the bottom quarter of those earned by CEOs in Motorola's peer group.
Some shareholders also criticized the company for its weak product lineup, especially in cell phones, where it ranks behind Finland's Nokia (news - web sites) (NOK1V.HE)(NYSE:NOK - news). Galvin promised that the new lineup of cell phones and other products would prove Motorola's strength.
He added that Motorola is No. 1 or No. 2 in about 85 percent of its businesses. The only two units struggling are its biggest, cell phones and semiconductors. Cell phones are expected to be profitable again in the fourth quarter, while semiconductors are harder to call because of the slowdown in orders.
``Pleased? I'm not pleased,'' Motorola board member Nicholas Negroponte told Reuters after the meeting about Motorola's current performance. ``Moving in the right direction? Yes.''
``Is it the best company for issues of lifestyle, design and products that are fun? That's where we may be weak,'' added the senior director of Massachusetts Institute of Technology (news - web sites)'s media laboratory. Negroponte said he remains confident in Galvin.
Former Execs Back Galvin
Two former Motorola leaders also backed Galvin.
``It's in good hands,'' said Galvin's father, Robert, who will retire from the board in May after leading the company for 31 years.
Gary Tooker, the CEO before Christopher Galvin, said he was ''optimistic'' and that Motorola was doing well in a tough economic environment.
Galvin said at the meeting that Motorola is strategically focused and financially sound. The tech recession was one of the main reasons for the company's struggles, and the money-losing semiconductor unit would have risen to industry profit standards by the first quarter if not for the slowdown.
The meeting was otherwise largely uneventful as Motorola's entire board was reelected. No other issues were considered.
Galvin told reporters after the meeting that he has encouraged the Federal Reserve (news - web sites) Bank officials to further cut interest rates, on top of the four rate cuts made so far this year.
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