Carl Icahn, the veteran activist investor, yesterday chose Motorola as his latest target, sending the company's share price higher and increasing pressure on management at the struggling US telecommunications equipment maker.
On the last day available to submit a proxy challenge for 2007, Mr Icahn informed Motorola that he would seek a board seat at the Illinois-based company.
The move, which comes a year after Mr Icahn waged a high-profile battle to break up Time Warner, follows a sharp drop in valuation at Motorola, which looks set to close its Cork operation with the loss of 350 jobs
The handset maker run by Ed Zander has seen its shares fall about 30 per cent since mid-October, and it suffered a poor fourth quarter after a mobile phone price war broke out during the Christmas shopping season.
Motorola's response on January 19th was to cut 3,500 jobs, or about 5 per cent of its workforce, in a move that is expected to save the company $400 million (€309 million) over two years.
Mr Icahn, a New York billionaire who owns a 1.39 per cent stake in Motorola, or 33.5 million shares, did not clarify his complaints against management.
However, news of his efforts prompted Motorola shares to jump 6 per cent in morning, trading to $19.39.
Since the 1980s, Mr Icahn has been campaigning against managements and boards of US and international corporations with mixed results. In his struggle against Time Warner he was unable to force a break-up of the media conglomerate.
However, he did push Dick Parsons, its chief executive, to expand Time Warner's share buyback programme, sell assets and reduce costs, all of which contributed to a sharp rise in the media group's shares. "The similarities between Time Warner and Motorola is that there is clearly value to be unlocked," said one Time Warner investor.
Over the past few years, Motorola has raised its dividend and announced plans for $8 billion in stock buybacks. It has also streamlined its business from six to three divisions. Most significantly, Motorola spun-off its semiconductor unit as Freescale, a public company which was last year acquired by private equity firms in a $17 billion deal.
Its biggest shareholders are institutional investors, with Barclays Global Investors holding a 6.9 per cent stake.
