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What Icahn Can Do for Motorola and Yahoo!

Monday, 9 Jun 2008 | 6:28 PM ET

Motorola and Yahoo! – arguably two of the most hated stocks on Mad Money – might now be worth buying. Why?

Carl Icahn.

Cramer said he heard the legendary activist investor speak at a high-level meeting last week, and Icahn laid out his plans to unlock as much value as he can from each company.

Cramer: In Icahn We Trust
Piggybacking off of Icahn is a proven strategy at this point, with Mad Money host Jim Cramer.

While Motorola’s cell-phone business is a “debacle,” as Cramer put it, the company’s other two divisions generate plenty of free cash flow. Icahn wants to break up Motorola into three pieces to take full advantage of the situation. In typical fashion, he’s maneuvering to get his people on the company’s board of directors to make sure that happens. Cramer said he’s confident Icahn will succeed.

As for Yahoo! , apparently Icahn’s convinced that only a combined Microsoft-Yahoo! can compete with Google. Whether that combination is a result of a merger or, in the very least, a search deal between the two companies remains to be seen. But you can bet Icahn will be using all the weight behind his more than $2.5 billion worth of YHOO stock to get it done.

What make MOT and YHOO even more attractive, though, is that they’re both incredibly cheap right now. So much so, Cramer said, “the opportunity to get into both of them hasn’t looked this good for a long while.”

Why trust Carl Icahn? Because he has a proven track record of success. Just look at Kerr McGee. Investors who bought the stock when it was announced that Icahn owned a position saw the share price climb 107% over 18 months. His Midas touch has helped investors in BEA Systems, Time Warner and many others as well.


Questions for Cramer? madmoney@cnbc.com

Questions, comments, suggestions for the Mad Money website? madcap@cnbc.com

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