Cable Operators

Icahn Revs Moto Move

3/30/2007 8:00 PM Eastern

Carl Icahn stepped up his crusade against Motorola management last week, revealing in a proxy statement filed with the Securities and Exchange Commission March 27 that he has increased his holdings in the electronics giant as he seeks to gain a seat on its board of directors.

Icahn, who launched his proxy bid against Motorola in January, revealed in the filing that the noted corporate raider and entities controlled by him own about 2.7% of Motorola’s outstanding stock, or about 65 million shares. In early proxy statements, Icahn and his partners owned about 2.4% (59 million) of Motorola’s outstanding shares.

According to the document filed on March 27, the proxy will allow Motorola shareholders to vote for Icahn and Motorola’s own slate of nominees for the board, with the exception of University of Arkansas chancellor John White.

I Think Icahn …
Investor Carl Icahn filed a revised proxy statement March 27, part of his ongoing battle to win a board seat at Motorola. Below are the number of shares of Motorola stock held by various Icahn entities.
Icahn Entity Motorola Shares % of Class
High River 12,982,660 0.54%
Icahn Master 24,750,709 1.04%
Icahn Master II 9,070,027 0.38%
Icahn Partners 18,109,904 0.76%
Total 64,913,300 2.72%
Source: SEC documents

Motorola’s annual shareholders meeting is scheduled for May 7 in Chicago.

In the proxy, Icahn stated that White was selected at random — SEC rules allow him to either solicit votes for only himself or for himself and fewer than the full slate of Motorola’s nominees.

Icahn has been critical of Motorola chairman Ed Zander and in particular has called for a massive buyback of Motorola shares, a tactic he used in a past proxy battle with Time Warner Inc. Although Icahn’s attempt to split up Time Warner failed, he did succeed in convincing the media giant to boost its share-repurchase program from $5 billion to $20 billion.

Motorola stock has been hit hard as sales of its most expensive cellphones have slowed. Its stock has declined 31% ($8.29 per share) since Oct. 13 when it was priced at $26.20 per share. The stock closed at $17.91 each on March 26.

Earlier this month, Motorola revised its first-quarter guidance downward, stating that revenue would be between $9.2 billion and $9.3 billion, far below its previous estimate of $10.4 billion to $10.6 billion. That reduced guidance was largely due to sluggish sales of its high-end handsets, such as the popular Razr phone. The company also shifted some top-level executive positions.

Motorola also seemed to accede to some of Icahn’s demands — the company said it would accelerate a planned $2 billion buyback of stock this year and increased its total three-year buyback plan to $7.5 million from $4.5 million.

March