Icahn Nominated To Motorola Board
NEW YORK -(Dow Jones)- Shares of Motorola increased 6% after the company said Tuesday that activist investor Carl Icahn has been nominated to the company's board of directors.
Icahn has had a history of taking an active role in companies he perceives are underperforming or improperly run. His interest in Motorola could be seen by investors as an attempt to turn around the company's recent struggles.
Motorola recently traded at $19.40, up $1.10, or 6%. They still continue to trade at the bottom end of their 52-week range; the 52-week low was $17.90, set Jan. 12.
The world's No. 2 handset maker recently hit a snag after reporting weak quarterly results for the second-straight period. Prices for its flagship handset Razr have plummeted, and its growing presence in the emerging markets has made turning a profit tougher for the company.
Analysts, however, are skeptical over how much Icahn can do, if he does anything at all. "It's a little different from what he's done in the past," said Bill Choi, an analyst at Jefferies & Co.
Unlike companies such as Time Warner, which Icahn tried to take over through a proxy fight last year, there are fewer strategic moves the investor could take to improve Motorola's results. The company has spent the past year streamlining its operations by spinning off its semiconductor unit and selling its automotive assets. Much of Motorola's problems stem from its product line-up, which Icahn would have little influence over.
A spokesman for Icahn couldn't immediately be reached for comment. No details regarding Icahn's intentions were given, according to a press release issued by Motorola. The investor owns 33.5 million shares, or roughly 1.4% of the company's shares outstanding. A vote on his nomination will take place at the annual shareholder meeting, of which no date has been set.
It's unclear whether Icahn will take any action. While Motorola has struggled recently - it posted a 48% decline in fourth-quarter net income - Chairman and Chief Executive Ed Zander is still well regarded on Wall Street.
During the company's 2007 outlook presentation to investors, Zander acknowledged the company's problems and said it was taking steps to increase its profitability. Among them were cost-cutting moves including the elimination of 3,500 jobs.
Zander took responsibility for the missteps and made himself and his team available to investors, a move that Choi said likely endeared him to Wall Street even more.
"Even with this very difficult quarter, he earned some respect," Choi said.
The analyst doesn't own a stake in Motorola, but his firm advised the company on its acquisition of Broadbus Technologies.
Icahn would also face a seasoned board. Motorola counts Ron Sommer, former chief executive of Deutsche Telekom, Douglas Warner, former chairman of JPMorgan Chase, and PepsiCo Chief Executive Indra Nooyi, as directors.
Still, others offered a more optimistic view. Prudential Financial analyst Inder Singh believes Icahn's involvement could lead to potential partnerships, mergers or acquisitions, or a change in direction. Until Icahn's intent becomes clearer, shares should move up in anticipation, he said in a note.
The analyst has no conflicts of interest to report.
Tying the two men closer was Zander's recent election to the Time Warner board, which Icahn has had an active hand in. Last year, the investor attempted to take over the media conglomerate through a proxy fight that culminated with a February report by Lazard, Icahn's investment bank, recommending the company be broken up. He has since backed away from the proxy contest, although the company took some of the steps he had been urging.
Last year, Icahn took over the chairmanship of ImClone Systems and has had a string of so-called activist investments in companies such as Blockbuster and Kerr-McGee made through his hedge fund. In addition to ImClone, he serves as chairman for XO Holdings, American Railcar Industries, and American Real Estate Partners and serves on a total of 12 boards.
-By Roger Cheng, Dow Jones Newswires; 201-938-2020; roger.cheng@dowjones.com
(Mike Barris contributed to this story.)
(END) Dow Jones Newswires"
Posted to the site on 30th January 2007
