Motorola and Icahn

In recent years, Motorola has improved its market share from 14 % to 22 % globally.Despite that, earnings last year fell about 20% from previous years even though sales increased by 22% to 42.9billion.This could be possibly due to its aggressive marking down the prices of its flagship products eg razr.Selling such products would have a detrimental effect on profit margins.Also, another factor is the excessive compensation package CEO Zander received last year. In spite of a poor performance and disappointing earnings, he was paid a whopping 13 million.Clearly,management is not working in the best interests of its shareholders.


Now,recently Icahn has bought a massive stake in the company (about 2 billion in Motorola stock).His sentiment is Motorola stock is undervalued and plans to push through an aggressive share buyback.Given his track record, he will able to find much support among the disgruntled Motorola shareholders and push through his ambitious goals.This probably can be viewed as a catalyst for unlocking shareholder value and give a boost to its sluggish stock price.