Motorola caves to Icahn, distraction cleared
Posted
Apr 07 2008, 03:32 PM
by
Kim Peterson

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."