Wednesday, July 11, 2007 Deal Journal: Motorola Shareholders Return the Activist Call

From last night's Deal Journal:

Deal Journal colleague Li Yuan has this follow-up post on the progress made in the latest shareholder-activist campaign at Motorola.

When it comes to activist investing, less may be more.

Less than 24 hours after he launched an online campaign urging the replacement of Motorola CEO Ed Zander and four of the company’s 10 directors, Eric Jackson received over 47,000 shares pledged by 20 fellow Motorola shareholders. (See this post we did yesterday for more on the campaign, and for a link to Jackson’s Blog.)

That’s much more interest that Jackson received in the early days of his six-month-long campaign to replace then-Yahoo CEO Terry Semel and some of the Internet company’s directors. Eventually, he got two million shares pledged by 100 Yahoo shareholders.

Deal Journal could not verify yet if the investors actually own the shares they pledged. But Jackson says that he believes most of them do. During his Yahoo campaign, he says he reached out to several shareholders that pledged a large number of shares and found that none of them misrepresented their ownership.

Jackson is among a new breed of activist investors who are using the Internet, via Blogs and videos, to band individual investors together to pressure under-performing companies to get their act together. Billionaire investor and professional activist Carl Icahn failed in his attempt to force change on the cell phone giant. Now we will see whether a grass roots campaign can do the trick.

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Joe said...


I attempted to add comments on the Wikia site without success, so I'll try here.

I am an employee of Home and Network Mobility (formerly known as Connected Home Solutions). I own approx. 6166 shares as of today in the Motorola stock fund in my 401k. There's an Icahn story about those shares which I will share if you're interested.

I want to applaud you for starting a grassroots effort to effect much needed changes in the leadership and management of Motorola. I will pledge all of my shares to such an effort.

Though I agree that Ed Zander has mismanaged the co. and needs to be replaced, many of the problems originated years ago during Chris Galvin's tenure. The company made a conscious effort to define itself in Wall Street's eyes as merely a cell phone company and let Mobile Devices develop into the 800 lb gorilla it is today. "Live by the cell phone, die by the cell phone".

That business is brutally cutthroat with low margins, low-price competition and you are at the mercy of your customers (wireless carriers) on pricing. Why anyone thought it was wise to let the rest of the company wither in order to build it is beyond me. Most people I know including myself only want a phone to talk. We don't want and won't pay for all of the gee-whiz video, music, games, etc that the Verizons of the world push at us as revenue streams for them.

My personal hope is that Motorola spins off Mobile Devices. I really don't see a profitable future in the business. It's true that if they intend to stay in it, they better be hiring the best product designers on the planet (steal them away from Apple if necessary) to come up with compelling products.

My experience has been and not just at Motorola that the techno-geeks and engineers come up with all of this wonderful technology and then try to sell it. I think the approach needs to be: determine what people want and need and then apply the appropriate technology in products that they will pay for.

Sorry for being long-winded. If you want to hear my proxy voting story, I'll be happy to share it with you.

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