Investing in Motorola: Bitter Marriage of Intellect by Monday?
By Ian L. Cooper
Come Monday, Motorola shareholders could seat Carl Icahn on the Motorola board, marrying intellect. But it’s looking more like a bitter exchange of barbs during a divorce, than a wanted marriage.
Whatever the near-term outcome, current Motorola CEO Ed Zander could be looking for another job with or without Icahn on board. One, it’s unlikely he’d be able to work with Icahn. And, two, even without Icahn on board, Zander’s ouster is likely. This is a troubled company that lost a third of its value, or $22 billion in five months. That’s just sloppy work from a guy alleged to have said, “I love my job. I hate my customers.”
Any way you look at it, it’s already looking like a bitter exchange of “he said, he said.”
Icahn has already said (alluding to Motorola) that too many “U.S. firms are run like ‘fraternities’ and have ‘egregious salaries’ and ‘crazy severance packages.’”
Then, Motorola criticized Icahn for even suggesting that a 34 year old hedge fund employee be named to the Motorola board, saying, “We question – as shareholders should – whether Carl Icahn will act in the best interests of all Motorola shareholders, or just in the best interest of Carl Icahn.” (as quoted in this Motorola letter: http://www.motorola.com/mediacenter/news/detail.jsp?globalObjectId=8117_8046_23/)
Then, Icahn said (as quoted by EDN.com), “Ask yourself what is the real reason Motorola management is devoting so much time and effort to deny a large stockholder a single board seat, when their time could be much better spent fixing their business at this critical juncture for the company. I am fearful the answer might be very troubling.”
Come on, guys. Can’t we all just get along?
Regardless of childlike behavior, Icahn is gaining favor among some shareholders, such as ClearBridge Advisors, which owns about 54 million MOT shares ($960 million value), which announced intentions to support the Icahn nomination.
You may remember that Icahn’s initial proposal came just after Motorola mucked up Q4 earnings on declining handset prices, saying that he wanted the company to use its $11.2 billion hoard of cash to buy back shares.
As Chris DeHaemer says, “You can buy the whole seat, but you’ll only need the edge.” That couldn’t be more true come Monday.
Take care,
Ian L. Cooper, Editor, Early Alert Trader
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