Motorola and Icahn.
I had a recent exchange with another SI member regarding MOTOROLA (MOT) and Carl Icahn, one of its main shareholders. I thought I’d post some of the more pertinent aspects of that discussion for anyone’s general comment ...
Firstly, we were waiting for any imminent comment from Icahn regarding MOT’s future. I had had a look at MOT’s most recent Financials and it was not surprising, IMO, that its share price has declined from about $18 to its current $7 a share over the last 3 years.
3 Years ago MOT had an Annual Revenue of about $36.6bil. This fell to $30.1bil. the next year and declined further to $22bil. in the last year.
The company only has about 4% left over at EBITDA and it showed a Loss of -$51mil. in the last 12 months.
At least that’s better than the -$4.2BIL. Loss it showed the previous year, but it’s not that much different than the -$49mil. Loss for the previous year.
One of the few positives in MOT’s financials is its $2.8bil. in Cash and $5bil. in “Marketable Securities” on its Balance Sheet. Maybe that’s what’s keeping Icahn interested.
Apart from that I’d say he may want to initiate Major Surgery and issue some ultimatums to MOT’s management to get this company out of the fertilizer.
Of course, just breaking up the company into its best possible components and selling it off may be the way to go.
I got the Annual MOT figures from the ADVFN Financial web site link below. Their latest Quarterly was their 4th. which naturally coincides with their Annual ...
advfn.com
One of the first things I look for is the top line Revenue trend, followed by how much Revenue is left over at the EBITDA level. I then check the Interest Expense, the Pretax Profit to Cap.Employed ratio and then the Bottom Line trend.
If all of that looks good I dig a bit deeper.
Would you, the reader, agree that major investors and "corporate raiders" such as Carl Icahn quite often do not do the "ordinary thing" or the expected thing. They see opportunity or potential where others don't and make their necessary moves while often keeping their cards very close to their chests.
I'd say that another common attribute of "corporate raiders" is their ability to recognize weak or incompetent management who are not doing the right thing or taking the correct action within their company. It’s at such times that the likes of an Icahn use their shareholding power to impose their will on the company on how it should be run or what should be done that’s in the best interests of the company and its shareholders.
Would you agree, or do you have another take on it ?
Here's an article I found on Icahn and MOT ....
businessweek.com
I thought the following opening paragraph was typical of an Icahn !!
"When billionaire Carl Icahn lost a battle last year to win seats on Motorola's board, he vowed that if the company failed to deliver better results, he'd be back. Now he is—and he has brought his lawyers with him."
Looks like Icahn also didn't think much of MOT's latest Financial results !! |
