Big Man, Big Job

Posted on by

Given the interest in Vikram Pandit taking the helm at Citi almost a year ago, I thought Mutineers might also be interested in the news of another DBD CEO appointed to save a troubled American company.

Motorola’s 70 Million Dollar Man

The problems facing Motorola’s handset division have provided fodder for business and tech rags for quite a while now. The core problem is that several years have now passed since the groundbreaking, nearly iconic Moto Razr was released, and the company has had a helluva time coming up with worthy successors. The result is that the firm that literally invented the mobile phone, withered the 80s/90s East Asian Invasion, and launched a celebrated comeback now finds itself slipping fast in a brutally competitive, global market –

Shares in the [Motorola] have fallen by more than 60 per cent since October 2006, when investors began to become disillusioned with the company’s falling sales. Its global market share has fallen to 9.5 per cent from 24 per cent two years ago, taking it from second to third place behind Nokia and Samsung.

The ailing handset division has been a drag on Motorola’s overall fortunes and several strategic options have been explored to save the group. The current front runner option is to bring in a new CEO for the group and spin out handsets as a separate company. On Monday, Motorola announced that Sanjay Jha would be tapped to lead this massive turnaround.

Due to my work in wireless systems & Sanjay’s former role as COO of Qualcomm, I’ve spent a lot of time within his sphere of influence (although I’ve never met the guy personally). Jha rose to the COO from the VLSI engineering ranks at Qualcomm CDMA Technologies (QCT) – the dominant business unit at the company and the one responsible for the bulk of QCOM’s $3B / year in profit.

Sanjay’s reputation within Qualcomm was stellar, to say the least. The wireless chip biz is a very competitive environment where sharp elbows, big egos, and fierce rivalries are the norm. Despite that, practically every person I’ve known who has ever worked for him raves to a startling degree. Press, analysts, and Wall Street nearly to a man have enjoyed his briefings and mastery of both the business and technical aspects of wireless. So much so that in nearly any other circumstance, he’d be widely considered the heir apparent to the throne.

However, a classic business / HR problem manifested itself mightily. The current CEO of Qualcomm, Paul Jacobs, is not only a young(-ish) 45 years old but is also the son of the famous company founder –> translation: He ain’t gonna make room for a new CEO anytime soon. So despite the peachy position at Qualcomm (whose stock has recently hit a 52wk high), Sanjay didn’t have the headroom to take his next career step.

QCOM vs. MOT Stock; Note the “Jha-effect” on both stocks

At the other end of the industry spectrum, we have Motorola. Tech companies are very much momentum plays for traders and employees alike and once the tide starts turning it rapidly becomes a self-fulfilling prophecy. Morale, culture, and stock price problems have massive, nonlinear effects that silently permeate nearly all operational aspects of a business. As a result, there’s currently a veritable flood of resumes streaming out of Motorola’s mobile phone group as the key brainpower leaps for greener pastures. So, by nearly any measure the problem at hand is a ridiculously difficult one to tackle. And in Motorola, a man of tremendous capability is presented with a company saddled with tremendous problems looking for a savior.

As tough as the job will be, multiple analysts have noted that Jha is one of the few individuals in the industry who have the chops to (possibly) pull off a turnaround –

“We are hard-pressed to imagine a better candidate than Dr. Jha,” said Citigroup analyst Jim Suva. [link]

Simona Jankowski and Thomas Lee, analysts for Goldman Sachs, called his appointment “a big win” for Motorola and a loss for Qualcomm.

Ben Wood, head of research at CCS Insight, said: “Sanjay Jha is very well connected in the mobile industry and knows the challenges facing him. Taking on that role is a hugely daunting task, but I think he has the personality to pull the company forward.” [link]

…None of this means Jha is doomed to fail at Motorola; in fact, Wall Street is bullish on his prospects. Motorola stock closed 11% higher for the day, driven by the news, and analysts had mostly nice things to say. UBS analyst Maynard Um pointed to his “strong execution history” at Qualcomm, and American Technology Research hailed his “great technical background, industry experience and business savvy.” [link]

Jha, living up to his reputation for business pragmatism, promises no drastic changes… at first. Instead, echoing the precedent of Lou Gerstner’s turnaround at IBM, Jha promises 90 days of learning –

“I’m going to take about 90 days working with the team here,” Jha told Fortune on Monday. “I don’t come here without any ideas – I have very strong ideas – but I’ll be working with a team here to determine what are the right next steps on the chipsets and platforms strategies.” He said the next year’s worth of phone introductions will probably go as planned, so his changes won’t be obvious until the second half of 2009.

Whatever the outcome, Jha is clearly taking a major risk with his career by leaving his sure thing at hyper-profitable Qualcomm and trying to right the sinking ship that’s Motorola Mobile Devices. As compensation, Motorola is offering him a package which guarantees a minimum of $70M in comp over the next 3 years –

$The new guy will have plenty of incentive to make good on that pledge to turn Moto’s phone business around. On top of his $1.2 million salary and annual cash bonus of up to $2.4 million, Jha’s welcome package includes personal use of the corporate jet, relocation expenses, a promise to make him whole if he loses money on the sale of his home in San Diego, and another promise to pay him $30 million in cash if Motorola fails to spin off the cell phone division before November 2010. He will be entitled to stock options worth 3% of the mobile devices division if it is made independent before that deadline. And of course, there are the equity awards: 3.67 million restricted stock units with a present value of more than $35 million, which he will receive over the next three years; and an option to buy 16.6 million shares at current prices.

Why those eyepopping numbers? Cuz Moto needs him more than he needs Moto –

So, what happens if Jha fails? For Motorola, of course, it would be disastrous. For Jha, however, maybe not so bad. As Nielsen IAG analyst Roger Entner noted, if Moto succeeds, Jha “can be the Lee Iacocca of the mobile industry, bringing an iconic brand back to life…if it goes south, he can say: ‘Sorry, this thing was so messed up when I got there that there was nothing I could do.’ “

And, of course, there’s always a desi angle. Interestingly, it turns out that Sanjay Jha shares his name with some other individuals including a motivational speaker –

Jha’s an impressive leader indeed — and apparently very versatile. If you Google his name, you’ll find that in addition to being a whiz in telecom, Sanjay Jha is also a Bollywood filmmaker who worked on such movies as “Praan Jaye Par Shaan na Jaye” and “Mission Kashmir.” He’s also South Asia bureau chief for the Canadian-based website NowPublic (and won the prestigious Loeb award this year to boot!) as well as an Amazon user in Toronto who took (and failed) the Oracle database exam.

Will the real Sanjay Jha please stand up?

Perhaps in the confusion they can scam some of his comp

30 thoughts on “Big Man, Big Job”

  1. Nice review Vinod. Kudos to Sanjay for having the courage to take up this challenge. He has an impressive track record and does seem like the guy who can try to turnaround Motorola.

    Sanjay will have to fix a lot of deeply-rooted problems at Motorola. He will need to cut through the notorious bureaucracy and the fix the glacial pace with which development is done over there.

    The Razr’s success just masked all these problems. In order to turnaround Motorola, Sanjay had a tough job of fixing a hidebound culture.

  3. why do you have to describe him as a dbd ceo. why can’t you just write south asian ceo?????????????????????

  4. Jha last name is very popular among Gujarati Naagar Brahmin, as well as among Kashmiri Brahmin. Not that it matters! Go Sanjay – you deserve this one.

  5. it’s so not a popular name among kashmiri brahmins. i am a kashmiri brahmin and i have never ever come across this name. but i’ll ask around and double check just to be sure and get back to you guys.

  6. Well, his 90 day rule reminds me of the CEO joke where the outgoing CEO leaves the incoming CEO 3 envelopes to be opened in times of trouble sequentially. During the first crisis, the first envelope is opened by the new CEO which says ‘Blame the old CEO’. When that does not work, the 2nd envelope is opened with the advice ‘Shuffle things around and make a big noise about changes’. When even that does not work, the 3rd envelope is opened which contains the advice ‘Prepare 3 new envelopes’.

    That said, while I do not know much about Jha personally and he could be a fantastic leader, I have heard a lot from colleagues who work there that the overall Qualcomm culture has over the years slided from a fast paced innovative company to a big company more relaxed less innovative culture a la Microsoft (or the design wing of Intel as opposed to the process technology wing). Of course this is bound to happen as companies grow. The recent stock surges are thanks to patent lawsuits going there way and little to do with Jha IMHO.

  7. I agree with Ardy about the recent stock price surge of MOT, also they just closed a big deal with China Mobile.

    Aside, isn’t Jha a common Bihari last name?

  8. Qualcomm and innovation?? C’mon … QCom is a company where there are more lawyers then there are engineers 🙂 (To extort money from other company for their royalty based model).

    Jha is clearly taking a major risk with his career by leaving his sure thing at hyper-profitable Qualcomm

    CDMA technology has a shrinking user base worldwide and the royalty (free money) is going to stop as the world moves to LTE (4G wireless technology). Jha is smart to move out of CDMA realm and into the real world. Life is not going to be all roses after 2011 at QCOM when the free money stops coming in.

  9. OMG yet another Brahmin CEO. At least he’s not an Iyer.

    Why, are you jealous? or is it that Brahmins don’t make good CEOs and Iyers are the worst?

  10. Mr. Jha can pretend to “turn around” the mobile division for a 2-3 years and then take the golden parachute and live happily ever after. No North American mobile phone maker is going to be successful unless they have a cult product like the iPhone. Samsung, LG and HTC have all introduced 3G version of the touch phone before the iPhone came out, still iPhone sells like crazy and the reason is its cult following. If not iPhone you have to have a product like the BlackBerry, who has the advantage of being first to market in smartphones.

    There is a reason Motorola cant make any money making CDMA phones to be sold in the biggest CDMA market, that is North America. Only the asian manufacturers can do it. Samsung and LG are making money on CDMA (even after feeding the QCOM pig).

    So good luck to the new CEO, but I am not jumping and buying Motorola shares on this news.

    And BTW, Jha is most probably Bihari.

  14. People I know at Qcomm say the guy is brilliant and I believe them. I’m just surprised they chose someone from Qcomm given that they have been an Intellectual Property house these past years and Moto’s woes are largely marketing (from product def to branding) related. I thought they would have wanted someone with a consumer CV

  15. Maybe looking at the ipod and other mp3 players example, the Moto board is convinced that they cannot compete with a space crowed by the iPhone at the high end and all the commodity phone guys at the lower end. Still, there is a lot of room for related technologies in the wireless space, particularly through integration of technologies, and considering Motos expertise in the embedded space too (now freescale) maybe they are thinking of something in a slightly different more tech heavy direction. I am just guessing…

  16. 13 · hello said

    I heard Jha is human. There, now we can all claim ownership.

    He is Scytho-Hepthalite. He will storm across the steppes of Schaumburg IL and sack Nokia. Helsinki will be filled with the woeful sounds of unemployed Finnish DSP/RF engineers bawling into their beer

  17. No North American mobile phone maker is going to be successful unless they have a cult product like the iPhone. Samsung, LG and HTC have all introduced 3G version of the touch phone before the iPhone came out, still iPhone sells like crazy and the reason is its cult following. If not iPhone you have to have a product like the BlackBerry, who has the advantage of being first to market in smartphones.

    IPhone does not sell that well because of its cult following but because its that good. In fact its the bomb! The web surfing is excellent and who could not fall in love with the blue dot following you around!

  18. In his bio it says Jha was educated in England. Probably born there too. Does that make him a dbd? Good to see a non-IITian also making the grade!

  19. AMFD, There is no doubt that iPhone is a great product. People bought iPhones even when the carrier (AT&T) was not subsidizing the price (which is the most common way of introduction of new cell phone product in the US market), that shows that there is something more than just a good product. People lining up to buy this product shows that the product also gives the users certain amount of “cool” factor (which has nothing to do with technology).

    As far as internet surfing is concerned the first iPhone release was on the older slower wireless internet networks, which would mean slow surfing. Compared to the iPhone there were several other SmartPhone products that were available to work on the faster newer wireless networks, but they were not selling as fast as the iPhone.

  20. His boss at Qualcomm was Mr. Paul Jacob; that is proper Mallu Christian name.

  21. 20 · UberMetroMallu said

    His boss at Qualcomm was Mr. Paul Jacob; that is proper Mallu Christian name.

    Actually, it was Dr. Paul Jacobs. Even more proper Mallu xtian 😉

  22. The CTO at Motorola used to be Padhmashree, a Telugu lady (IITian). Looks like Motorola has no glass ceiling for Indians or women.

  24. Yeah, Padmasree Warrior has moved on to Cisco. Probably reached her level of incompetence there, which she was rumored to have done so at Motorola! I don’t think there is a glass ceiling anymore these days for anyone really, especially not for south Asians. If anything, there seems to be an instant aura of worthiness bestowed on most south Asians, warranted or otherwise, thanks is part to the excellent groundwork laid by IITians and others over the years!

  27. 26 · Amitabh said

    Jha is probably a Maithil brahmin from Mithila (region in Bihar).

    Well, apparently there is one thing the DBDs and ABDs can always agree on: caste and region games. Cuz’ clearly that’s the important thing here. In fact, I believe Motorola hired him to fill a state IAS quota.

  28. Extremely impressive resume. But only time will tell how good he really is, now that he’s in the public eye. We were very happy and proud when Pandit made CEO, so were those in the Black community with Stan O’Neal, but their challenges turned out to be larger than anything they’ve previously faced.

    Besides having Samsung and Nokia ahead, there’s stiff competition behind Moto (ie iPhone) with plans to make their own mark on the market.

  29. The other Jha I know is Bihari. But that’s not important.

    What is (naively to me), is that BREW didn’t take up with Symbian device manufacturers and MediaFLO isnt with UMTS networks (DVB-H is, at least in the EU). And not sure how far CDMA has taken to IMS applications. May be Qualcomm wants to be the Mac of the mobile world.