Wednesday, April 25, 2007

WSJ: ISS Backs Icahn's Bid to Join Motorola Board

Congrats to Carl Icahn and ISS on this news from the Wall Street Journal. A new perspective on Motorola's board can only be a good thing for shareholders.

Proxy advisory firm Institutional Shareholder Services said Wednesday it is backing billionaire investor Carl Ichan's bid to join Motorola Inc.'s board.

The recommendation comes as a blow to Motorola and Chief Executive Ed Zander, who has expressed his belief that Mr. Icahn's inexperience in the industry and history as a board member wouldn't add value to the handset maker. Over the past few weeks, the rhetoric between the two sides has gotten louder.

Given the recent struggles in the world's No. 2 handset maker, ISS believes it is time for change.
"Although long-term historical picture is more favorable, the significant near-term deterioration argues for a new perspective on the board," according to the report.

Mr. Zander has argued that Mr. Icahn is not a technology expert, and that the companies on which he has taken an active interest have had inferior records when compared with Motorola.

ISS noted that other incumbent board members have no technology experience.

ISS cites Mr. Icahn's "positive track record for creating shareholder value across a diverse universe of industries, whether as a board member, or as an outside shareholder activist," as a reason why he should join Motorola's board.

Mr. Icahn continues his push. "I am gratified that ISS has seen the need for significant stockholder representation on the Motorola board," he said in a statement.

Motorola, meanwhile, said it disagreed with ISS. "Carl Icahn's success as an investor does not qualify him to serve on Motorola's board of directors -- investor experience is not director effectiveness," said spokesman Paul Alfieri.

Motorola has been plagued with dramatic declines in the price of its handsets and the lack of next-generation phones, causing the company to issue profit warnings in the last two quarters.
The weakness provided an opening for Mr. Icahn, who Motorola said began aggressively acquiring shares at the beginning of the year, to exert his influence.

Mr. Icahn had initially called for an aggressive stock buyback that would've taken Motorola into debt, but has since reversed his position and called for improvements to the business. Motorola, meanwhile, moderately boosted its own stock buyback program although maintains roughly $9 billion in cash.

The company swung to a loss in the first quarter and said sales for the second quarter would continue to slump. Mr. Zander, who is under increasing pressure after shuffling his management team, has his hopes pinned on a recovery in the second half.

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