updated 04:10 pm EDT, Thu July 21, 2011
Icahn wants Motorola to consider selling IP
Frequent activist investor Carl Icahn on Thursday triggered a rush on Motorola Mobility's shares after he called on the company to consider selling patents. A 13D filing with the SEC asked the Android smartphone designer to look at "alternatives regarding its patent portfolio to enhance shareholder value." Icahn has 11.36 percent of Motorola's shares and would immediately stand to benefit from any sale.
Motorola's board responded in turn with a rebuttal and said it didn't have any need to sell patents. It argued that its revenue shot up 22 percent in the first quarter of the year and that its patent library, with 17,000 active patents and 7,500 upcoming, was one of the very keys to its success.
The company's claims came at a time when doubts still persisted over its revival as a smartphone-first phone producer. A first full quarter after Motorola's split into two companies, the larger Mobility side posted an $81 million loss and was reporting a bleaker picture than from the past year. Despite a Super Bowl TV ad and the close support of its favorite carrier Verizon, Motorola only sold 250,000 Xoom tablets. Trouble erupted in smartphones as well when the Verizon iPhone arrived, taking away the AT&T exclusivity shelter that had kept Motorola from having to compete with Apple.
Icahn's hopes for a selloff are likely prompted by the recent Nortel patent sale, where 6,000 patents went to an Apple-led group for $4.5 billion. InterDigital, often a foe of phone designers through its patent demands, has been looking to sell itself off and give a large bundle of patents to whoever was the winning bidder. A patent sale could help Motorola fund itself and get more attention in a market where Apple, HTC, and Samsung are increasingly gaining influence.
Patents have been vital for Motorola in recent months and have led to countersuits against heavyweights like Microsoft that are trying to stifle Android.