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UPDATE: Motorola Taps Qualcomm's Jha to Run Handset Operations

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NEW YORK (Dow Jones) Motorola said Monday it tapped Qualcomm executive Sanjay Jha as co chief executive and head of its mobile devices business, answering one of the biggest questions at the company.

In hiring Jha, a veteran of the wireless industry, Motorola is shoring up the uncertainties in leadership at the company and setting a direction for the embattled handset business as it prepares to break away from the company late next year.

"We believe Mr. Jha's strong execution history at Qualcomm will be viewed favorably," said Maynard Um, an analyst at UBS. "Mr. Jha has a proven operating execution history and see this as a positive for Motorola."

One of the biggest problems with Motorola in recent years is the lack of innovation. The company failed to follow up with its ultra-slim Razr and exploited the blockbuster phone's success until it slipped into the role of de facto free phone given away with a two-year contract. It lost much of its luster as other high-profile devices such as the Apple iPhone took the spotlight.

Jha will look to address the matter immediately.

"I'll begin to influence the direction quickly," he said in an interview with Dow Jones Newswires, adding it was too early to tell when phones with his fingerprints would hit the market given the long handset design cycles.

The new CEO will take 90 days to review the business before making significant moves. Jha added that aside from adding one or two members, he didn't anticipate any major changes to the team.

"The team in place is an awesome team," he said.

Greg Brown, the other co-chief, said Jha was his top pick and the most qualified candidate considered.

"I believe Sanjay will hit the ground running," he told Dow Jones Newswires. "I'm thrilled."

Motorola has struggled, having lost half its market share since 2006. On Thursday, the company reported wider losses at its cellphone business in the second quarter even as it held on to its market-share position. Results were helped by cost cutting and growth in its other businesses. Brown made it clear to analysts during a conference call Thursday that even with such a long-term target for the spinoff, a lot still depends on a narrowing of losses at the handset division.

"Mobile Devices does need continued improvement in financial performance, as well as a better level of predictability, and that improvement is crucial to a successful separation," Brown told Dow Jones on Thursday. He warned that the division's market share was likely to fall again in the third quarter.

Motorola said last week that it plans to spin off the mobile-devices business in the third quarter of next year. By naming Jha as co-chief executive, it takes much of the pressure off of Brown, who was seen as lacking experience in the area. With Jha on board, Brown can focus on his natural strength, the home, government and network equipment businesses.

Both Jha and Brown said they plan to work together extensively, suggesting further cooperation between their units even as the businesses break apart.

"I believe this is the right structure with the right leaders to provide the necessary management focus and agility to position both businesses for long-term success," said Chairman David Dorman.

Jha, 45 years old, will help with innovation. In addition to serving as chief operating officer, he ran the CDMA technologies unit and oversaw the research and development of the Flarion unit, which deals with fourth-generation wireless technologies. Qualcomm Chief Executive Paul Jacobs credited Jha, who served at the company for 14 years, with much of the success of its technologies business.

"Sanjay's leadership has been instrumental in growing (Qualcomm CDMA Technologies) into the No. 1 wireless semiconductor supplier," Jacobs said in a statement.

Qualcomm suffered a blow with the loss of Jha. The company had just scored a victory with its settlement with Nokia and was back to focusing on its core wireless technology development and patent licensing businesses.

"We view Qualcomm's promotion of Len Lauer as COO...as somewhat questionable," said Todd Rosenbluth, analyst at Standard & Poor's Equity Research. While Lauer led the company's emerging-technology segment for more than 18 months, of concern is his history as chief operating officer of Sprint Nextel at a time when it lost market share.

The company promoted group president Lauer to chief operating officer. Steve Mollenkopf, executive vice president of the technologies business, was bumped to president.

Some may question Jha's decision to leave a successful, stable company in Qualcomm for the riskier Motorola. But where others see problems, Jha sees potential.

"The opportunity here is tremendous to take this business to the next level," he said.

Motorola stock recently rose 90 cents, or 10.2%, to $9.71 on volume of 31.3 million compared with average daily volume of 25.3 million. Qualcomm stock is down $1.72, or 3.1% to $53.77.

-By Roger Cheng, Dow Jones Newswires; 201-938-2020; roger.cheng@dowjones.com

(Donna Kardos contributed to this report.)

(END) Dow Jones Newswires

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