Motorola faces suit from famous investor
updated 03:10 pm EDT, Mon March 24, 2008
Carl Icahn vs. Motorola
Motorola is being deliberately guarded about the prospects of its cellphone business, a lawsuit from a prominent investor alleges. Carl Icahn has been unhappy with the declining fortunes of the company, and for a year has proposed the installation of four new directors; Motorola has fought back, however, and is claimed by Icahn to have resisted attempts at accessing useful records. The lawsuit, filed in a Delaware court, looks to obtain those records, to "ascertain what the board could have done" to persuade shareholders that financial comments were right and would not give "an inaccurate perspective on the prospects for the mobile devices business."
Motorola defends itself, saying that Icahn was offered information access, but that he rejected it along with a standard confidentiality agreement.
Icahn contends Motorola's stock is deeply undervalued, and that selling or otherwise spinning off the cellphone division would improve profits for both himself and other shareholders. The value of the company could jump by as much as $20 billion, he says.
Falling sales have triggered a number of labor crises at Motorola. A recent head of the cellphone division, Stu Reed, left after only eight months, while other members of management have been forced out. The company's UK design team has been threatened with firings of as much as half of its people, which may reflect unhappiness with the lack of a phone as successful as the original RAZR. [via The Wall Street Journal]
