Saturday, March 29, 2008

Motorola: The Legend Bites Dust. For Now. Watch Out For A Phoenix Like Rebirth.

It rained cats and dogs back here in Bangalore, while I sat back and watched the saga unfold on my computer. The news started to pour in and boy did it pour!

Almost every publication worth its salt started chronicling the “death of the cell phone legend” and all the while I waited for the storm clouds to clear.

Continuing with my series on Motorola let me start where I had left off. With Moto’s executives jumping the ship and the controversies that were dogging Moto, something had to give. With Icahn, the dog with the bone (referring to his investment in Moto) always looking to take a bite whenever the opportune moment presented itself, pity and empathy were my feeling for Moto.

The last straw had to be broken for something catastrophic to happen and that was Icahn’s lawsuit. Icahn sought a court order that would force Motorola to turn over documents about its trademark cell-phone business and senior executives. Among other materials, Icahn is seeking board documents related to a potential spinoff of the cell-phone unit, the service and selection of Motorola's senior officers and materials related to the use of company aircraft by senior management, board members and their families.

Icahn’s official jumbo mumbo was: “We demanded these materials for the purposes of enabling us to investigate whether and to what extent the board of directors of Motorola failed in their duties as directors in supervising management and setting policy and direction of Motorola.”

But really, Icahn wanted to use these documents to use it as leverage in his proxy battle. He hoped that these would give more bite to his attempt to get his men nominated to Moto’s board.

Motorola resisted initially and then relented and offered him two seats on the board, but refused to even consider one of his men (Keith Meister) doubting his credentials. This enraged Icahn and like a bloodhound which had smelt blood, stuck to his guns and called for a breakup.

Adding further insult, Icahn questioned if Brown is fit to run the company, asking what “qualified” Brown to be the CEO. “He certainly -- as far as I can ascertain -- has no in-depth experience or knowledge concerning the mobile devices business, which was and is by far the major problem for Motorola,” Icahn said in a letter.

Then came the bolt fro the blue.

Motorola announced the decision to spit the company into two entities. One will be the Motorola’s legendary handset business. The other would be Motorola's broadband and mobility solutions operations. These include the profitable home networks business, which sells television set-top boxes, and enterprise mobility solutions, which supplies computing, broadband network gear, including WiMAX technology and communications equipment to companies.

The company announced that it will bring about the changes sometime in 2009.

Icahn though smirking over his victory, shot off a letter to Motorola’s board again asking them why it will take until 2009 to separate the businesses.

Mr. Brown trying to salvage some pride insisted that Motorola's decision to split had nothing to do with pressure from Mr. Icahn.

However the analysts predict that the short-term winners will be Nokia and Samsung, and maybe Sony Ericsson; who will be able to increase their market share. But in the longer term, Motorola can stage a comeback.

I still remember fondly the iconic DynaTAC released in 1984.

It makes me proud owning a Motorola Razr 2 v8, that it’s a part of history. A legend in every sense.

Today, the split is seen as a possible scenario where Motorola would be ultimately acquired by some Chinese company.

Watch out, for the Phoenix will rise from the ashes to soar into the skies which it once owned.

Only time will tell……

1 comment:

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