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

From today's FT.com:

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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WSJ.com Deal Journal: A New Thorn in Motorola's Side

From today's Deal Journal in the WSJ.com by Li Yuan:



Posted by Dana Cimilluca

Deal Journal colleague Li Yuan reports on the latest “activist” shareholder campaign at Motorola.

Eric Jackson owns just 130 shares of Motorola stock, but the activist investor and blogger has got big plans for the ailing mobile phone company.

Jackson on Monday afternoon launched an online campaign called “A ‘Plan B’ for Motorola,” urging the replacement of Ed Zander as CEO and chairman immediately — as well as four of 10 other board members, among other initiatives. He also posted videos on YouTube and put up a Web page where shareholders can “pledge” their shares to support his plan.

It would be easy to ignore Jackson, if he hadn’t helped balloon an investor revolt at Yahoo ahead of last month’s resignation of former CEO Terry Semel. Jackson owned just 96 Yahoo shares, but his barrage of blog posts and online videos quickly got him attention. He launched the campaign in January, agitating for the ouster Semel and some board members. About 100 Yahoo shareholders pledged roughly two million shares on youchoose.net to support him (representing about 0.2% of Yahoo outstanding shares).

Jackson is among a new breed of investors who are savvy about the grass-roots power of the Internet and use it to make activism no longer a game reserved only for wealthy financiers. The goal of his Motorola campaign is to find a solution “which will deliver extraordinary value to Motorola shareholders” and “put Motorola on a path back to its rightful place as the worldwide leader in communications,” he writes in the proposal.

It marks the second time this year Zander and Motorola’s board of directors have had to fend off an activist onslaught. Billionaire financier Carl Icahn lost a proxy fight in May to get a seat on Motorola’s board.

Motorola has faltered the past two quarters due to the lack of a successor to its hit Razr cellphone and declining margins in its handset division, which accounts for more than half of the company’s sales. The problems forced the company to report a loss in the first quarter and project a difficult year. The company also more than doubled its planned job reductions and cost cutting. A few analysts recently lowered their forecast for the second quarter, expecting weaker earnings than they had factored in before.

A Motorola spokeswoman declined to comment.

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Portfolio: First Semel, Now... Zander?

From today's Portfolio.com by Russ Mitchell:

Eric Jackson, an emerging Web activist for corporate reform, is calling for the immediate replacement of Motorola Chairman and C.E.O. Ed Zander.

Jackson used a Web campaign to pull together nearly 100 shareholders representing 2 million shares to vote against Yahoo Chairman and C.E.O. Terry Semel last month. Just days after Yahoo's annual meeting, at which Semel called Jackson's questions "cute," Semel stepped down as C.E.O. It's unclear how much credit Jackson can take for Semel's dethronement.

Jackson's "Plan B" for Motorola, in addition to calling for Zander's head, demands the replacement of several board members, calls for the company to outline a long-term vision and strategy for Motorola, and the appointment of a permanent head for the company's mobile devices business.

Jackson also is promoting Edward Lampert of ESL Investments as a board member.

Stock activist Carl Icahn is also pushing for change at the troubled electronics company, whose earnings and stock have tumbled as the company failed to keep up with the fast-changing pace of the wireless telecom industry.

Jackson says he's not talked with Icahn, and points out that while Icahn is focused on Motorola's balance sheet, particularly its cash hoard, Jackson is targeting corporate governance. He runs a leadership consulting firm, Jackson Leadership Systems.

by Russ Mitchell

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