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: 2012 movie massacre hung over 'Interview' decision

add to favorites email to friend print save as pdf

Related Stories

Second security clearance investigation contractor hacked

12 minutes ago

Federal officials say the private files of 48,439 workers may have been compromised by a computer breach at government contractor KeyPoint Government Solutions Inc. The hacking incident is the second this year at a major ...

Digital dilemma: How will US respond to Sony hack?

23 minutes ago

The detective work blaming North Korea for the Sony hacker break-in appears so far to be largely circumstantial, The Associated Press has learned. The dramatic conclusion of a Korean role is based on subtle ...

Recommended for you

Sony tells AFP it still plans movie release

8 minutes ago

Sony Pictures boss Michael Lynton denied Friday the Hollywood studio has "caved" by canceling the release of "The Interview," and said it still hoped to release the controversial film.

2012 movie massacre hung over 'Interview' decision

13 hours ago

When a group claiming credit for the hacking of Sony Pictures Entertainment threated violence against theaters showing "The Interview" earlier this week, the fate of the movie's big-screen life was all but ...

Clooney slams skittish Hollywood after Sony hack

20 hours ago

Film star George Clooney slammed the Hollywood movie industry for failing to stand up against the cyber threats that prompted Sony Pictures to cancel release of the movie "The Interview."

Atos shares soar after Xerox acquisition

22 hours ago

Shares in French tech firm Atos soared nearly five percent on Friday as traders cheered the news it had bought the IT wing of Xerox for more than $1 billion.

User comments : 0

Please sign in to add a comment. Registration is free, and takes less than a minute. Read more

Click here to reset your password.
Sign in to get notified via email when new comments are made.