Tuesday, July 10, 2007

FT.com: Motorola is the Latest Target of Poor Man's Activism

There’s been an outbreak of mini-activism - and it’s all over the telecoms companies.

In the UK, we’ve had the puzzling case of John Mayo and Efficient Capital Structures taking a tilt at Vodafone, with just over 200,000 shares in their back pocket.
But in the US, they are not to be outdone - or perhaps we mean underdone. Eric Jackson, the 34-year old who led a web-based effort to force change at Yahoo! armed with little more than a blog and YouTube, is at it again, says Deal Journal.

He’s sitting on a mere 130 shares in Motorola. And no - there are no zeros missing from that figure.Jackson on Monday launched a campaign via his blog called “Plan B for Motorola“, calling for the immediate ousting of chief executive Ed Zander, and the removal of four Motorola directors. The idea is that other shareholders can “pledge” their shares in support of his plan.

Jackson kicked off his campaign against Yahoo! in January with only 96 shares to his name - agitating against chief executive Terry Semel, who resigned last month, and collecting about 100 shareholders in support though the site youchoose.net.

For his Motorola campaign, Mr Jackson is again using the site. As of about 3pm London time, he appeared to have nine pledges of support, or a total of 17,704 shares behind him - though what, if any, verification there is that the share ownership figures are genuine is abundantly unclear.

The sales pitch on the site runs:

Since Jan.’04, when Ed Zander took over as Chairman and CEO of Motorola, shareholder returns have been 13.5%, while Nokia returned 37.8% and the S&P 500 return was 35.2%. Our returns as shareholders would have been 3x greater if we had put our money in either of those the day Ed Zander started. His past performance and the currently articulated strategy for a turnaround are neither sufficient nor acceptable.

Mr Jackson’s other plans for Motorola include appointing a permanent head of the mobile device business. He also has a suggestion for one replacement for those he’s seeking to get axed from the board: Edward Lampert.

The hedge fund manager is their top choice for a board slot, on the basis of his “strong track record of business experience,” and his ownership of Motorola stock. In a filing back in May, RBS Partners, an affiliate of Mr. Lampert’s ESL Investment’s, said it held 925,000 shares in Motorola, worth about $16m. No one paid much attention though, as at the time it also revealed a $800m holding in Citigroup.

Motorola has already locked horns with a rather more well-funded activist this year: Carl Icahn, who lost a proxy fight to gain a seat on Motorola’s board in May.

Can a midge succeed where the heavyweight was defeated?

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