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Motorola Beset By Post-Razr Blues

After Razr, Motorola fell behind on developing a phone with the next generation of technology--a mistake especially hazardous in cellphones, where it can take two to three years to develop a new line. As a result, profit margins narrowed, the company swung to a loss, key executives left, the stock price dropped and activist investor Carl Icahn began campaigning for a board seat.

Meanwhile, Motorola faced corporate infighting during the transition to a new CEO--Ed Zander--from outside the industry, which interrupted new-product development. Zander struggled to bring his Silicon Valley ways to the cellphone world.

On one occasion, Zander burst into a meeting of the handset division and demanded to know why Motorola phones were selling so cheaply, according to someone present. Executives told him carriers decide the price, and would go elsewhere if Motorola didn't want to lower its prices. "I love my job. I hate my customers," Zander reportedly shouted.



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