Icahn: Motorola Should Fix Problems Before Buyback

Apr 15, 2007

Billionaire investor Carl Icahn sent a letter to Motorola Inc. shareholders calling for the No.2 mobile phone maker to fix its operational problems, saying that took precedence to a share buyback.

The activist shareholder, who seeks a seat on Motorola's board, had previously only urged the company to increase its share repurchase program to boost shareholder value.

But he now says other matters take precedence.

"Until our operational problems are corrected, buy-backs and other transactions that might have looked appropriate earlier need to take a back seat," Icahn said in the letter dated April 12 that was disclosed in a filing with the U.S. Securities and Exchange Commission on Friday.

Icahn and his affiliates own over 68 million Motorola shares, or a roughly 2.9 percent stake. He urged shareholders to vote him on to the board at a May 7 annual meeting in Chicago.

His letter came after Motorola warned in late March that it would post a first-quarter loss and gave a 2007 outlook that was much worse than expected due to weak mobile phone sales.

Motorola - which has lost about a third of its market value, or $22 billion, in the last five months due disappointing results - pledged to accelerate and expand its share buyback program, but that failed to appease Icahn.

He criticized the board for being "passive and reactive" and said it should push executives to fix problems that have led to a sharp fall in phone prices as the company tried to hold on to market share amid stiff competition in emerging markets and against industry leader Nokia.

"In my view, an engaged Board of Directors should have been able to help Motorola avoid the missteps that currently plague its business, or at least to have identified and addressed those problems earlier," Icahn's letter said.

Motorola has urged shareholders not to vote for Icahn.

A Motorola spokesman said on Friday the company "is keenly aware of its duties to its shareholders and they are actively engaged," and that it is committed to "returning significant value" to shareholders.

Icahn has agitated for change at many companies and is also seeking board seats at WCI Communities Inc. and Temple-Inland Inc. He said that, if elected to the board, he would devote his attention to Motorola.

"I expect to commit the time to Motorola that is commensurate with my large investment and the responsibility that this new position brings with it," he said in the letter. "Therefore, if I am elected I will reduce my membership on the boards of public companies to less than six."

Motorola shares edged up 3 cents to $17.55 in Friday trading on the New York Stock Exchange.

In late January, Icahn said he had taken a stake in Motorola and would seek a board seat to try to pressure the company into using some of its $11.3 billion in cash to buy back its shares.

Copyright 2007 by Ziff Davis Media, Distributed by United Press International

Explore further: Apple closes acquisition of Beats music

add to favorites email to friend print save as pdf

Related Stories

Scalping can raise ticket prices

10 hours ago

Scalping gets a bad rap. For years, artists and concert promoters have stigmatized ticket resale as a practice that unfairly hurts their own sales and forces fans to pay exorbitant prices for tickets to sold-out concerts. ...

Tropical Storm Genevieve forms in Eastern Pacific

12 hours ago

The seventh tropical depression of the Eastern Pacific Ocean formed and quickly ramped up to a tropical storm named "Genevieve." NOAA's GOES-West satellite captured an infrared image of the newborn storm ...

Recommended for you

Apple closes acquisition of Beats music

1 hour ago

Apple said Friday it closed its $3 billion deal for Beats, the high-end audio equipment and streaming music service, a tie-up that could allow the iPhone maker to reach new audiences.

Scientific Games strikes $3.3B deal to buy Bally

3 hours ago

Scientific Games plans to pay about $3.3 billion to buy Bally Technologies in a deal that would combine makers of gambling equipment ranging from slot machines to instant-win lottery games.

Tesla loss widens as it ramps up expansion plan

8 hours ago

US electric automaker Tesla Motors reported Thursday a widening loss in the past quarter amid record revenues as it ramped up plans for a giant battery plant for future vehicles.

Android grabs 85% of smartphone market

22 hours ago

Smartphones powered by the Android operating system captured 85 percent of the worldwide market in the second quarter, threatening to marginalize rival platforms, a new survey shows.

Chinese man brings gay conversion therapy lawsuit

Jul 31, 2014

(AP)—A gay Chinese man said Thursday he was suing a psychological clinic for carrying out electric shocks intended to turn him straight, as well as the search engine giant Baidu for advertising the center.

User comments : 0