Icahn Boosts Stake in Motorola
By ROGER CHENG And SARA SILVER
NEW YORK—Activist investor Carl Icahn sharply increased his stake in Motorola Inc., which is preparing to split itself in two.
The billionaire, through his various funds, boosted his Motorola holdings to 203.3 million shares, or roughly 8.8% of the company's total outstanding, according to a recent filing with the Securities and Exchange Commission. At the end of last year, he owned 119.8 million shares.
A person familiar with the matter said he believes Mr. Icahn's latest buying reflects a view that Motorola's value will rise when it completes the split, which is now set for early next year. "He perceives there is value to be unlocked," this person said.
Mr. Icahn has played an influential role at Motorola since taking a stake in the company, pushing aggressively for its breakup. Mr. Icahn couldn't be reached for comment Monday. A spokesman for Motorola also couldn't be reached.
In 4 p.m. composite trading Monday on the New York Stock Exchange, Motorola's shares were up 34 cents, or 5.2%, at $6.94. The stock has risen nearly 15% since hitting $6.04 in late January
Motorola is the nation's leading supplier of public-safety radios and cable set-top boxes, and has a lucrative but shrinking business making telecom-network equipment.
Under its split-up plan, the company's networks division and enterprise-mobility division, which mainly makes public-safety equipment, would become a separate company from its mobile-devices business, which includes cellphones, and its cash-generating set-top box unit. The former would be run by Motorola Co-Chief Executive Greg Brown and the latter by Co-CEO Sanjay Jha.
Mr. Icahn acquired his initial shares in the company in 2007, as it was reporting continuing losses and slumping sales due to the lack of a successful follow-up to its blockbuster Razr cellphone. The investor, who paid an average $14 a share for his stock, sought a presence on the board, arguing that the cellphone unit's problems had depressed the company's shares, which were worth about $24.
Motorola headed off a proxy battle with Mr. Icahn by agreeing to put two directors Mr. Icahn recommended on its board. Under terms of the deal, he agreed not to disparage the company.
For this year's first quarter, Motorola reported improved smartphone sales, helped largely by Verizon Wireless's aggressive promotion of the Droid, the Motorola phone that runs Google Inc.'s Android smartphone operating system. Motorola's Mr. Jha also reiterated his belief that the company's high-profile mobile-devices unit would return to profitability by the end of the year, while the rest of the company's units continue to post a profit.
In a recent interview with Dow Jones Newswires and Wall Street Journal editors, Mr. Brown said that he believed that the split remained the best move for the company, saying it would unlock more shareholder value than if the pieces stayed together.
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