May-02-2007

Motorola boss 'like Alice in Wonderland'

(topic overview)
CONTENTS:

In a full-page ad published in The Wall Street Journal, Icahn blasted Motorola CEO Ed Zander and other managers for the cell phone maker's continued financial problems and urged shareholders to elect him to the 13-member board during Monday's annual meeting. (More...)
Icahn's ad in Tuesday's Journal was framed as a letter to Motorola shareholders. (More...)
Motorola and its directors and executive officers and other members of management and employees may be deemed to be participants in the solicitation of proxies in connection with the 2007 Annual Stockholders Meeting. (More...)
Your Board is comprised of proven business and academic leaders -- serious, dedicated individuals who are committed to doing what is in the best interests of Motorola and its stockholders. (More...)
"All's fair in love and proxy fights." (More...)
The companies current directors have reportedly questioned Icahn's knowledge of the company's business and technology in general. (More...)
Instructions for voting your shares by telephone, Internet or mail are enclosed, along with your WHITE proxy card and postage-paid return envelope. (More...)
Your Board has a proven track record of taking proactive steps and creating significant stockholder value. (More...)
Icahn quoted Ed Zander as saying that "performance at our mobile device business in the first quarter was unacceptable." (More...)

REFERENCES

In a full-page ad published in The Wall Street Journal, Icahn blasted Motorola CEO Ed Zander and other managers for the cell phone maker's continued financial problems and urged shareholders to elect him to the 13-member board during Monday's annual meeting. Cost containment for communications vendors and their carrier customers can be achieved on two fronts. [1] The Wall Street Journal has reviewed the ad and it sounds pretty exciting: Icahn writes that the company has "Motorola has stumbled, and stumbled badly" and referred to a recent comment by CEO Ed Zander as "something straight out of Alice in Wonderland." It'll be interesting to see what reaction the stock has -- several proxy firms have recently lent their support to Ichan's bid for a seat on the company's board, which should come as no surprise.[2] In a letter to investors, published as a full-page advertisement in the Wall Street Journal, Icahn said Motorola "suffered a critical failure in oversight and leadership." Icahn, who said he was seeking one board seat and not control of the company, used the letter to air his most pointed criticism yet of Zander since late January when he began his quest for a board seat.[3]

Tough competition has hit the firm's handset sales, sending it into the red for the first three months of 2007. Mr Icahn said the company had "stumbled badly" under current chief executive Ed Zander and pointed to his successes in increasing shareholder value at other companies. He also drew heavily on a recent Wall Street Journal article in which Mr Zander was quoted saying: "I love my job.[4] Icahn said: "As things deteriorated, CEO Ed Zander, according to the Wall Street Journal, shouted at an office meeting, 'I love my job. I hate my customers', which reportedly became one of his favourite phrases. It sounds like something straight out of Alice in Wonderland." He said that when Cingular Wireless, one of Motorola's biggest customers, launched its 3G service, Motorola had no handsets to offer to Cingular. Cingular got their phones from Samsung.[5]

Icahn's ad in Tuesday's Journal was framed as a letter to Motorola shareholders. He wrote that "Motorola has stumbled, and stumbled badly. Over the past 6 months, on this board's watch, almost $20 billion of market value, of stockholder value, of your money, has disappaered. [6] Motorola opposes the nomination of Icahn, who controls 2.9 percent of the company's stock. Icahn, 71, has said he plans to use a board seat to pressure Motorola executives to improve profit margins at its mobile-phone business and eventually return more cash to shareholders. In today's letter, he didn't provide additional details on his plans as a director.[7] Mr Icahn is fighting to win a seat on Motorola's board at a shareholders' meeting on Monday, despite opposition from incumbent directors. He maintains the firm needs a shake-up and accuses its management of failing to keep up with rivals such as Nokia, Samsung and Apple.[8] Motorola has suffered a critical failure in oversight and leadership that must be addressed." Icahn also trumpeted recommendations last week from two proxy advisory firms, Institutional Shareholder Services and Proxy Governance, that he should be elected to Motorola's board. In its own letter to shareholders Tuesday, Motorola touted the recommendation last week of another proxy advisory firm, Glass Lewis, that Icahn not be elected to its board.[6]

Motorola Inc. urged shareholders not to elect billionaire financier Carl Icahn to the board, saying he has no plan to deliver value to shareholders, is unfamiliar with the company and its industry, and that as a professional investor, he would have conflicts of interest.[9] After beginning his involvement with Motorola with a relatively tame call for a share buyback, legendary activist investor Carl Icahn has upped the rhetoric at the company with an open-letter to the company's management that will be published as a full-page ad.[2]

Motorola disputed Icahn's argument that the company needs a "fresh perspective" on the board, saying it has added five independent directors over the last three years. The company said it offered to work with Icahn to find a mutually acceptable candidate, but he declined. Icahn, who said he and affiliates own 68 million Motorola shares worth $1.2 billion, has intensified his campaign to get a Motorola board seat, and called the company "troubled."[9] The criticism, which marks the first personal remarks toward Mr. Zander since Mr. Icahn began buying shares in the company in January, is part of a letter in which Mr. Icahn directly addresses Motorola shareholders.[10] Icahn's letter was the latest volley in what has become a full-fledged fight for a seat on the company's board. Since mid-March, he has issued nine messages to the company's shareholders in the form of letters, news releases and proxy filings, according to a search of Securities and Exchange Commission documents.[11]

The letter appears in a full-page ad in Tuesday's edition of the paper. Icahn said in late January he was seeking a board seat at Motorola, which has struggled in recent quarters with weak cell phone sales that caused it to post a first-quarter loss.[12] We are not convinced that Carl Icahn would commit the time and energy necessary to serve you well as a Board member. In a Reuters interview, Carl Icahn admitted that he might have dropped his demand for a Board seat had Motorola pursued his ill-advised leveraged stock repurchase program.[13] The decision of whether to support a nominee for election is no different. Your Board takes seriously its obligation to nominate the very best candidates available. We will not, in Carl Icahn's words, "simply add" him to the Board just to avoid a proxy fight.[13] If you have already signed and returned Carl Icahn's gold proxy card, you can revoke that vote and cast a new vote by completing, signing, dating and returning the enclosed WHITE proxy card today.[13]

Remember, first and foremost, Carl Icahn is a professional investor whose business is running funds which buy and sell public company securities. He has responsibilities to his investors which may conflict with his ability to represent all stockholders.[13]

In recent years Mr Icahn has snapped up stakes in U.S. media group Time Warner and building materials maker Temple Inland. At each company he suggested radical reforms - such as selling off assets - that would either lift the group's shares or create more value for shareholders.[14] I can't think of one good reason." Icahn said he and affiliates own over 68 million Motorola shares, or a roughly 3 percent stake, with a value of over $1.2 billion.[15]

Since January, Icahn and his affiliates have bought 2.9% of Motorola's stock, a stake worth nearly $1.3 billion. Last month, Motorola posted its first quarterly loss since 2004 amid dismal sales in its largest segment, mobile devices.[11]

In an effort at damage control, Motorola said Zander was "joking" about "hating" Motorola's customers, the Journal said. Shareholders, though, seriously have found little to like about Motorola who stock has plunged more than 18 percent this year.[16] Motorola's mobile phone operation -- the world's second largest -- has fared even worse since, posting a first-quarter loss. Over the past two weeks, Motorola and Icahn have been firing off letters to shareholders, trying to win their support. Tuesday marked the first time such a letter was also published as an advertisement.[17] Though proxy battles aren't easy to win, Icahn stands a good chance of prevailing with Motorola. Icahn probably wouldn't stay on the board for long anyway if he won. He doesn't seem to operating companies as much as shaking them up.[16]

Each of your directors has extensive knowledge of, and a commitment to, Motorola and its businesses. Your Board has actively guided the Company's strategic direction and has taken decisive actions to improve stockholder value based on its deep experience and interest in Motorola's technology, customers and products.[13] Icahn's bid for a board seat is opposed by the Schaumburg-based company's management and directors.[17]

In a separate letter to employees, Zander said customers are the company's "primary focus'' and that Icahn has "painted Motorola in an unfavorable light.''[7] Motorola has suffered a critical failure in oversight and leadership that must be addressed," said Icahn. He insisted that Motorola is a great company with good employees but says it has been shaken by leadership setbacks that could have and should have been averted.[5]

Motorola and its directors and executive officers and other members of management and employees may be deemed to be participants in the solicitation of proxies in connection with the 2007 Annual Stockholders Meeting. [18] No matter how many shares of Motorola stock you own, it is important that your shares be represented and voted at the Annual Meeting.[13] If your shares of Motorola Common Stock are held for you by a broker or bank, only your broker or banker can vote your shares and only after receiving your specific instructions.[13]

Motorola's shares, which edged up to $17.46 yesterday, are trading close to a two-year low and have slumped by a third since October.[8] Quarterly earnings increased to $23 million, or $1.80 per share, from $21.4 million, or $1.67 per share, during. Morgan Stanley sets spinoff ratio for Discover ' Morgan Stanley, which previously announced plans to spin off its Discover Financial Services unit to shareholders, will distribute one Discover share for every two Morgan Stanley shares held, according to a regulatory filing on Tuesday.[19]

Leading proxy advisory firms lined up in opposing camps last week _ two recommending that shareholders vote for the dissident investor and a third siding with the world's No. 2 cell-phone maker.[20] Mr. Lichterman, a well-respected developer, put the Igoe Building, 600 W. Van Buren St., up for sale before. Little discontent over deal at CBOT meeting ' If Chicago Board of Trade shareholders are unhappy with management's handling of the company's sale process, they showed little sign of it at the company's annual meeting Tuesday.[19] Icahn also charged that the company's board is moving forward with business as usual despite problems.[21] Tuesday's correspondence was the latest volley in what has become a full-fledged fight for a seat on the company's board.[20]

Your Board is comprised of proven business and academic leaders -- serious, dedicated individuals who are committed to doing what is in the best interests of Motorola and its stockholders. [13] In connection with the solicitation of proxies, Motorola has filed with the Securities and Exchange Commission and mailed to stockholders a definitive proxy statement.[18] Stockholders may obtain additional free copies of the Proxy Statement and other relevant documents filed with the SEC by Motorola through the website maintained by the SEC at http://www.sec.gov/ ]] http://www.sec.gov/.[18]

"All's fair in love and proxy fights." An ad in the Journal -- such as the one Icahn placed -- costs $199,636. [17] I hate my customers." "It sounds like something straight out of Alice in Wonderland," says Mr Icahn's letter to shareholders.[8] When it comes to extracting shareholder value out of questionably managed companies, few can come close to Icahn's track record.[2]

The companies current directors have reportedly questioned Icahn's knowledge of the company's business and technology in general. They may have a point. [2] A Fortune 100 company with global presence and impact, Motorola had sales of U.S. $42.9 billion in 2006.[18] The Encino, Calif. -based company last week said it pocketed $7.7 million in a funding round from Warner Music Group, Bertelsmann Digital Investments, the D.E. Shaw Group and undisclosed angel investors. Emotive said it will use the cash to push its flagship product, which allows a caller to temporarily override the ringtone of the person being called with another tune.[22]

I and other members of the senior leadership team have been meeting with investors, customers, partners and employees all over the world. It is very important for us to understand what our customers and investors need and expect from us right now. For now, let me take this opportunity to re-emphasize that our primary focus is -- as it always has been -- our customers.[23]

Instructions for voting your shares by telephone, Internet or mail are enclosed, along with your WHITE proxy card and postage-paid return envelope. [13] ADM's profit misses expectations, shares fall ' Shares of Archer Daniels Midland Co. fell more than 5% Tuesday after the nation's largest ethanol producer reported a profit increase for the third fiscal quarter that fell short of Wall Street expectations.[19] Current value takes into account dividends and value of Freescale Semiconductor shares distributed to shareholders; assumes all dividends reinvested at the market closing price on day of payment; value of FSL represents 0.110415 FSL shares per MOT share owned at December 2004 multiplied by shares held at that time multiplied by take private cash consideration of $40.00 per FSL share.[13]

Your Board has a proven track record of taking proactive steps and creating significant stockholder value. [13] Board decisions should be based on what is in the BEST interests of all stockholders. If a Board were to decide to make an acquisition, sell a division, repurchase stock or increase capital spending based on a standard of "What's the harm?" -- that Board would be derelict in its duties.[18]

Icahn quoted Ed Zander as saying that "performance at our mobile device business in the first quarter was unacceptable." [5]

REFERENCES

1. Icahn steps up campaign for Motorola board seat
2. Icahn ramps up the rhetoric at Motorola - BloggingStocks
3. Icahn Steps Up Motorola Campaign, Aims At CEO Zander - Networking - IT Channel News by CRN and VARBusiness
4. Icahn takes out full-page advert to brand Motorola boss a 'failure' | Markets | Business | Money | Telegraph
5. Icahn turns heat on Zander in Motorola board battle - CBRonline.com
6. War of Words between Motorola and Icahn flares hotter | Chicago Tribune
7. Bloomberg.com: Worldwide
8. Motorola boss 'like Alice in Wonderland' | | Guardian Unlimited Business
9. Motorola Urges Shareholders to Reject Icahn ((IC.XX), Motorola Inc. (MOT), (US620076)) | SmartMoney.com
10. Icahn Bid for Motorola Seat Takes More Critical Tone - WSJ.com
11. Motorola News | Motorola vs. Icahn battle heats up | Crain's
12. Icahn Motorola Campaign - News - MSNBC.com
13. Motorola Issues Open Letter to Stockholders
14. BBC NEWS | Business | Icahn raises pressure on Motorola
15. KPLC-TV Lake Charles/Lafayette, Louisiana: Hurricane Rita Video/DVD - Icahn takes aim at Motorola's Zander
16. Can Motorola's CEO work with Icahn? - BloggingStocks
17. Icahn vs. Motorola heats up | Chicago Tribune
18. Motorola, Inc. :: Motorola Issues Open Letter to Stockholders
19. Chicago Business News, Analysis & Articles | Chicago Daily Headlines | Crain's
20. Icahn Pushes for Motorola Board Seat | Chron.com - Houston Chronicle
21. Icahn turns up the heat on Motorola'with'letter - May. 1, 2007
22. Icahn GETS PERSONAL in campaign for seat on Moto board :: RCR Wireless News
23. Letter from Motorola CEO - WSJ.com

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Motorola boss 'like Alice in Wonderland'

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