Icahn, Motorola row escalates

The row between billionaire corporate raider, Carl Icahn, and Motorola escalated on Wednesday as the company reported a first quarter loss of $181m, largely due to the flagging performance of the handset division.

The world’s second largest handset manufacturer said that sales in the Mobile Devices segment came in at $5.4bn, down 15 per cent compared with the year ago quarter. The beleaguered unit also incurred an operating loss of $231m, compared with operating earnings of $701m a year ago.

Icahn, who is seeking a seat on the Motorola board, initiated a proxy fight in March and on Wednesday stepped up his attack on the firm.

In an open letter to shareholders, Icahn redoubled his efforts to win the support of Motorola investors. “Today’s earnings conference call reaffirmed my belief that Motorola has a passive and reactive Board, which failed to timely steer management in the right direction, and carries significant responsibility for the predicament in which Motorola finds itself,” he said.

“With your support, I will serve as an active, engaged director of Motorola, unafraid to demand management accountability and to ask the tough questions that appear to me to have gone unasked.”

Ed Zander, chairman and CEO of Motorola, supplied fodder for Icahn’s criticism in his commentary of the first quarter results. “As I said a few weeks ago, the performance in our Mobile Devices business in the first quarter is unacceptable and we are committed to restoring it to an appropriate level of profitability.”

Zander said that the company is “pursuing aggressive actions” to improve the performance of the handset business, including streamlining the product portfolio, through the discontinuation of legacy products, reducing the workforce, finding alternate sources of silicon, increasing its focus on Linux/Java and rationalising the segment’s product pricing structure and distribution strategy.

The Financial Times reports that Motorola has responded to Icahn’s criticism, calling it an “unwarranted attack” and has said that the investor is “new to Motorola” and “is not technologically savvy, or knowledgeable about our businesses”.


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