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Motorola caves to Icahn, distraction cleared

Posted Apr 07 2008, 03:32 PM by Kim Peterson
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Activist investor Carl Icahn, whom Fortune says makes more money for shareholders than anyone, has won a round in his ongoing battle with Motorola. Icahn took on Motorola last year, when he invited then-CEO Ed Zander into his office and said, "You have a great company. Why did you screw it up?"

Zander is now gone, and Icahn, whose investment company which owns 6.4% of the company, is targeting the board. Today, Motorola allowed two of his handpicked nominees to its board (Icahn originally wanted four). Motorola shares rose 1.5% on the news to close at $9.82.

This is good news. Icahn backs off, allowing Motorola some breathing room as it figures out its future. The new directors will likely push the company to spin off its cell phone division quickly. Motorola was looking at next year to split itself in two, a move Icahn said was long overdue. Perhaps Motorola can move on to more important things now, like making decent cell phones.

One of Icahn's favored directors, Keith Meister, goes on the board immediately. Motorola was against Meister's nomination, saying the 34-year-old fund manager wasn't qualified. Motorola will nominate Meister and another Icahn buddy, William Hambrecht, for board election at its shareholders' meeting, which pretty much guarantees their positions.

In return for getting two board members, Icahn agreed to drop his lawsuits against the company and vote his shares in favor of all board nominees. And he'll stop bashing the company in public. 

OK, so everyone's making nice. How about working on those cell phones next? As one analyst politely put it, "it'll still take time to get that product portfolio repaired."

Comments

 

Ha! More like ICANT than Icahn, if you ask me!

As a former Motorola employee and benefactor of a decent pension from this former giant in the industry I am delighted to see a more 'forward thinking' influence being infused into the Motorola Corporate circle.  However I fear that, like the American auto industry, it may be too little too late!  The American buying public will most likely take a very long time and have to see a lot of really great products emerge before they give up their Samsungs and Nokias.  You simply cannot agree to play on an even playing field against young upstart emerging economic powers and hope to have any success by using stodgy well worn business tactics and lethargic research and development departments who have completely lost touch with the public's buying habits and product desires.  As long as I have been associated with Motorola, they have always built good rock solid reliable products that were obsolete before they ever hit the store shelves or lacked developmental support to insure acceptance by the public.  So, if for nothing more than sentimental reasons, I wish them good luck and good fortune.

"Perhaps Motorola can move on to more important things now, like making decent cell phones."

ummm, are you a just a complete moron or are you a total moron.  motorola makes the best cell phones HANDS DOWN.  and no i don't work for or have stock in motorola.  i just point out obvious facts in a blunt manner.  i've had every make of cell phone in the last 10 years and the only ones i've never had problems with were motorolas.

so get your head out of your rear end and write intelligently instead of spewing out completely baseless and, in fact, untrue garbage.

thanks

i worked semiconductor industry for 23 years as an equipment engineer. In the middle of that I went to Trans World Airlines and played avionics. This was right after Icahn bought TWA. He parted TWA out, loaded them with debt by selling all there paid for assests to some of his leasing companies for pennies on the dollar and then loading TWA with market value leases for the equipment they once OWNED.....Beware Motorola employees...hang onto your shorts!  

If Icahn aspires to being something of a populist today, the makeover would have been an even bigger reach in the past. Besides the greenmailing that left regular shareholders in the cold, his tenure as owner-operator of TWA from 1985 to 1993 no doubt cost many workers their jobs after he stripped the airline of many of its most profitable assets and starved it of new spending on planes and equipment.

As a former employee, this move was long over due; Motorola has been in a fierce tail-spin since 1999. Poor to no sustainable decisions about Sector and overall Corporate Strategy, Confusing Product Mix, Lack of Clarity  about True Commpetitive Advantages & Disadvantages, and most importantly, the misalignment about what got REWARDED as "good leadership behavior" as opposed to what was espoused as "good leadership behavior, all lead to this inevitable point in time.  I wonder if Icahn is too little too late...

Ed Zander wasn't happy that the Razr was the most advanced and most desired phone, selling like hot cakes, he wanted more market share sooner than NOW...so he dropped the price when he didn't need to.  Lost profit and momentum.  Motorola hasn't been able to duplicate the spark since.  I wish them luck,  seems to me that they need new young blood ... as stated before, folks in touch with the markets they serve.

Funny that a comment here says that the user has never had a problem with motorola phones: because currently im on my 3rd motorola phone! and not by choice! So before we go along and bash every other cellular phone maker, lets take a closer look.

Kim needs to brush up on her grammer..it's not..."which owns 6.4% of the stock, it's "who" owns ....the story may be factual, but the writing is not very professional

aj  you GOT TO BE JOKEING yes razar was the BALM but that was YEARS AGO.

yes i Love Motorola ....but come on likee everything else the asians are killing us

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