Worst wireless CEOs of all time
Former Hewlett-Packard CEO Leo Apotheker
Hewlett-Packard hired former SAP CEO Leo Apotheker in November 2010 in the wake of the downfall of Mark Hurd, who resigned following an investigation into an allegation of sexual harassment. Apotheker, better known as a software executive at SAP than for having direct engineering or hardware expertise, nonetheless had big ambitions for HP's webOS platform, which he inherited when HP bought Palm for $1.2 billion under Hurd.
With webOS, Apotheker said the computer maker wanted to steal Apple's (NASDAQ:AAPL) "cool" factor. He also said HP wanted to scale up the webOS ecosystem by shipping 100 million webOS-enabled products per year, including smartphones, tablets, PCs and printers.
Then, on Aug. 18, just 16 months after it bought Palm, HP killed its webOS device business. A little more than a month later, Apotheker was ousted from HP, given a $7.2 million severance package and replaced with former eBay CEO Meg Whitman. Admittedly, Apotheker's main responsibility was not dealing with webOS. However, he was the leader of HP while the company was working on its webOS TouchPad tablet, and he consistently over-promised and under-delivered in terms of HP smartphones and tablets. Though the smartphone and tablet business is by no means an easy gig, Apotheker clearly couldn't hack it.
Former Sprint CEO Gary Forsee
Former Sprint Nextel (NYSE:S) CEO Gary Foresee took over Sprint in 2004 and oversaw the merger of Sprint and Nextel in 2005, which would go down as one of the worst wireless acquisitions of all time. The merger combined not only two different network technologies, but two different corporate cultures and workforces; Forsee was not at all adept at managing the transition, with disastrous results for Sprint's customers and financials.
After Sprint's acquisition of Nextel, the carrier began heading downhill. Prior to the acquisition, Nextel enjoyed low churn rates and high average revenues per user, but after Sprint took over the business iDEN customers began leaving in droves. Moreover, the fact that Sprint dumped 1,000 customers that had called the company's customer service line one too many times didn't help the company's brand image, nor did the hodge-podge of rate-plan options the company had.
Shareholders began pressuring Foresee about all of these issues as well as Sprint's commitment to WiMAX technology. By October 2007 it was clear Forsee's days were numbered, and he was ousted on Oct. 9, 2007 to be replaced by Dan Hesse.
Forsee's failings as a CEO were legion. The bungled integration of Sprint and Nextel led the company to write down $29.7 billion of the $36 billion purchase price. Sprint's customer service was abysmal, and the company neglected problems on its iDEN network. Forsee's poor management put Sprint into such a tailspin that it is still trying to recover. Perhaps the best indication of Forsee's failings was Sprint's subscriber base, which fell from 53.8 million at the end of 2007 to 49.3 million at the end of 2008. (Sprint currently has more than 52 million customers and projects that it will be net-addition positive for postpaid subscribers for 2011.)
Former Nokia CEO Olli-Pekka Kallasvuo
Olli-Pekka Kallasvuo joined Nokia (NYSE:NOK) in 1980 and ascended to the CEO position in June 2006, well ahead of Apple's (NASDAQ:AAPL) iPhone. Yet Kallasvuo's biggest failing as CEO was not reacting fast enough to the changing nature of the smartphone market, as well as a lack of focus on the U.S. market, despite pronouncements to the contrary.
In the fall of 2008 it became clear that the iPhone was not a passing fad and Kallasvuo openly noted that the company needed to focus more on the U.S. market. To that end, Nokia tried to make inroads with AT&T Mobility (NYSE:T) in 2009, but the efforts that they produced, including the E71x and Surge smartphones, weren't exactly big hits. Nokia's high-end smartphones--the N97, for instance--were often sold in the U.S. unlocked and unsubsidized. This business model either reflected a lack of understanding of how the U.S. handset market works or apathy toward the U.S. market in general, neither of which reflects well on Kallasvuo in hindsight. Still, as late as the third quarter of 2009, according to Gartner, Nokia's Symbian platform still commanded close to 45 percent of the global smartphone market. (By the third quarter of 2010, Symbian would slip to 36.6 percent, while Google's (NASDAQ:GOOG) Android would grow to 25.5 percent, up from 3.5 percent in the third quarter of 2009.)
Nokia continued to muddle along for the next few quarters and in May 2010 Kallasvuo deflected criticism from shareholders of his management of the company and promised to "help close the gap" on smartphones, where the company's market share was eroding. Also around this time, Nokia unveiled its flagship N8 Symbian smartphone. Another management shakeup followed shortly thereafter and rumors started bubbling that Nokia was looking to oust Kallasvuo.
Indeed, by September 2010, Kallasvuo was out, replaced by Microsoft (NASDAQ:MSFT) executive Stephen Elop. Five months later, Elop moved to use Microsoft's Windows Phone as Nokia's primary smartphone platform, the clearest signal that Kallasvuo's tenure, and his stewardship of Nokia's smartphone business, had failed.
Most agree that Kallasvuo failed to accept that smartphones would quickly replace feature phones as shoppers' device of choice. Nokia has long stood at the top of the handset heap, but it was during a time when low-end phones represented the bulk of the market. Kallasvuo's failure to see the transition to smartphones, sparked by the iPhone, created a gulf that Nokia may never recover from.
Former Nortel Networks CEO Mike Zafirovski
Although Zafirovski became Nortel Networks CEO in November 2005, and thus was not tainted by the financial fraud scandal that engulfed former Nortel CEO Frank Dunn, he also shares the ignominy of being the leader who led Nortel into bankruptcy.
Less than six months after Zafirovski became CEO Nortel posted a $2.58 billion loss related to a shareholder lawsuit from the Dunn scandal. Still, there were bright spots--Nortel won a $2 billion contract to upgrade Verizon Wireless' (NYSE:VZ) CDMA EV-DO network. But that wasn't enough to support Nortel's vast operations, and the company began a series of massive workforce reductions and profit warnings that indicated the company was unable to face fierce competition from the likes of Alcatel-Lucent (NASDAQ:ALU) and Nokia Siemens Networks.
Throughout 2007, Nortel's revenue kept on dropping, and by February 2008 it was time for another round of layoffs: 2,100 jobs were cut this time. Revenue rose 11 percent in the first quarter of 2008, but things didn't stay rosy for long as slumping CDMA sales and weakening macroeconomic conditions hit the company hard, and Nortel posted a $138 million second-quarter loss. By September 2008 Nortel had revised down its full-year outlook. In November 2008 Nortel posted a staggering $3.41 billion loss and cut another 1,300 jobs. Despite having $2.6 billion in cash as of December 2008, Nortel was reportedly contemplating bankruptcy because of uncertainty about some of its long-term financial problems, including its pension deficit, as well the future market for its voice-only wireless equipment, which was already declining.
Then, in January 2009, the big blow came and Nortel filed for Chapter 11 bankruptcy protection. Nortel would eventually be sold off in pieces, many of them to Ericsson (NASDAQ:ERIC), and a once-proud Canadian vendor faded into history. Zafirovski did not cause the structural problems that eventually felled Nortel, but he did little to arrest their effects, and for all of his job cutting Nortel failed to compete in the marketplace, and bankruptcy became its option of last resort.
Former Motorola CEO Ed Zander
Former Motorola CEO Ed Zander's biggest fault as a CEO was simply standing still. He became CEO at the beginning of 2004 and then rode the Razr gravy train into a graveyard, dooming Motorola to falling market share and near-irrelevance, from which it has only recently been rescued.
The Razr was introduced in 2004 and became a runaway hit, so much so that in the third quarter of 2005, Motorola posted a $1.75 billion profit and claimed 19 percent of the global handset market. The Razr continued to drive sales and profits for the company--Motorola shipped 44.7 million total handsets in the fourth quarter of 2005. The demand continued largely unabated through 2006. The engorged sales gave Motorola enough cash to make purchases that included a $3.9 billion buy of Symbol Technologies, a maker of devices for the mobile enterprise like handheld computers, barcode scanners and RFID technology.
By the beginning of 2007 though, it was starting to become clear that Motorola's strong play in emerging markets was coming back to bite the company. The handset vendor warned it would miss financial expectations for the fourth quarter because of weak mobile-phone sales and falling handset prices. Motorola managed to grab 4.3 percent more in handset marketshare during the fourth quarter of 2006, but suffered a 48 percent drop in net income as a result as margins shrunk. That spurred activist investor Carl Icahn to seek a seat on company's board in January 2007.
Zander seemed to go on the defensive, especially after Apple's (NASDAQ:AAPL) Steve Jobs unveiled the first iPhone in January 2007. "It's a hard business to stay on top of your game quarter after quarter," Zander said at an investor conference in March. "You have to have an almost maniacal focus." Other choice quotes from the conference included: "I still think the Razr as we know it today can make more money," as well as, "When you talk Apple, don't think that Nokia (NYSE:NOK), Samsung and Motorola won't have cool phones to respond."
In the first quarter of 2007, Motorola's handset business reported $5.4 billion in sales, down 15 percent year-over-year. By July, Motorola said it did not expect its handset division to be profitable by year-end. Motorola was desperately trying to keep the Razr fresh, but by November, it was clear Zander had to go.
Zander's replacement, Sanjay Jha, managed to see what Zander could not: That Motorola needed to remove itself from the feature phone business and focus on smartphones. Jha did so by building only Android phones, and partially as a result Motorola this year agreed to be acquired by Google for $12.5 billion.