Motorola, the world's second-largest handset manufacturer behind Nokia, gained significant backing Monday when the California Public Employees' Retirement System said it would support the company's incumbent slate of directors.
Icahn, who through his affiliates has amassed a 2.9% stake in Motorola, has been endorsed by at least one of the Schaumburg-based company's largest shareholders. ClearBridge Advisors, which owns 2.2% of Motorola's shares, said Friday it would support the activist shareholder in his bid for one of 13 seats on the company's board.
Criticism of Icahn
Motorola executives continue to maintain that Icahn is unqualified for the post and too busy with other commitments.
"We question--as should you--whether Carl Icahn will act in the best interests of all Motorola stockholders, or just in the best interest of Carl Icahn," company executives said in an open letter to shareholders late last week. "As a stockholder of Motorola, ask yourself whether someone like Carl Icahn, who is overcommitted elsewhere and underinformed about Motorola, would be a constructive addition to your board."
Icahn's bid has even divided leading proxy advisory firms, who lined up in opposing camps last month--two recommending that shareholders vote for the dissident investor and a third siding with the world's No. 2 cell phone maker.
Icahn blames executives for Motorola's sagging fortunes and the dismal performance of its once-golden cell phone unit.
"Ask yourself what is the real reason Motorola management is devoting so much time and effort to deny a large stockholder a single board seat, when their time could be much better spent fixing their business at this critical juncture for the company," he said in a letter Friday. "I am fearful the answer might be very troubling."
Motorola had been on a two-year hot streak, thanks to the popularity of its Razr phones. Then it aggressively cut prices of Razrs and other high-end phones, especially in emerging markets, to boost market share. Profits dropped steeply.
Motorola's stock has lost about one-third of its market value since October.
Last month, Motorola posted its first quarterly loss since 2004 amid dismal sales in its largest segment, mobile devices. The company has reshuffled management and announced in January it would cut 3,500 jobs, or about 5 percent of its work force, as it tries it to reduce operating costs.