Motorola hit back for the first time on Wednesday at Carl Icahn, the billionaire Wall Street investor who is seeking a seat on the struggling US mobile phone maker’s board by waging a proxy battle.
Motorola, whose comments came after the company reported a $181m first quarter loss, reflecting weak handset sales, described Mr Icahn as, “under-informed about our business and overcommitted elsewhere” and rejected his appeal to shareholders to elect him to the board.
“Carl Icahn’s suggestion that he be added to Motorola’s board to ‘hold management accountable’ and that Icahn alone – not the board – is capable of doing that, is an unwarranted attack on the highly qualified, dedicated, experienced and serious team of men and women who serve on Motorola’s board,” said Motorola.
Mr Icahn, who has built up a 2.9 per cent stake in Motorola valued at about $1.2bn, has openly criticised the board in a series of letters to investors accusing them of being too passive.
On Wednesday, in his latest letter, he said difficulties revealed in Motorola’s conference call with investors reaffirmed his belief that the board had “failed to timely steer management in the right direction”.
In response, Motorola pointedly noted that Mr Icahn is “new to Motorola, and to the industries in which we operate, having first bought shares in late January,” and added, “even Carl Icahn would admit that he is not technologically savvy, or knowledgeable about our businesses”.
The company continued: “The only Icahn suggestions to date have been with respect to his misguided call for a large share repurchase program – something which Icahn himself now admits is not appropriate.”
And it accused Mr Icahn of ignoring “the superior performance of Motorola’s networks and enterprise and connected homes businesses (which collectively had revenues of more than $4bn in the first quarter of 2007 alone)”.
The exchange between the protagonists came as Motorola reported a first quarter loss but said it expected to eke out a small profit in the current quarter.
The company, which warned investors about the loss last month, reported a first quarter loss of $181m, or 8 cents a share, compared with a year-ago profit of $686m, or 27 cents a share. Revenue fell nearly 2 percent to $9.43bn from $9.61bn.
In the latest quarter, Motorola shipped 45.4m handsets, down from 65.7m in the fourth quarter last year, while revenue in its core mobile devices division dropped 15 per cent from the year-ago quarter to $5.4bn. The unit posted an operating loss of $231m compared with a profit of $701m in the year-ago period.