CHICAGO (AP) - Motorola Inc. on Monday dismissed as an "unnecessary
distraction" billionaire investor Carl Icahn's legal efforts to force it to turn
over documents about its executives and its cell phone business.
Icahn plans to use the material in his battle to win four seats on the
Schaumburg-based company's board. Motorola prevailed in a similar proxy battle
with Icahn a year ago.
"Over the past 12 months the statements and predictions of Motorola's
management and the board about mobile devices business have too often proven to
be wrong," Icahn said in a statement.
Icahn sued the company for the documents Monday afternoon in the Court of
Chancery of the State of Delaware.
"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," he said.
Motorola said it rejected Icahn's "demand for extensive access to its books
and records" earlier this month on the belief that he does not have a credible
basis to request such an inspection.
"Motorola had offered Mr. Icahn access to information concerning Motorola
pursuant to a customary confidentiality agreement, but Mr. Icahn chose not to
avail himself of that opportunity and instead seeks to create further
unnecessary distraction," the company said in a statement.
The investor has nominated former Viacom Inc. CEO Frank Biondi, WR Hambrecht
& Co. founder and CEO William Hambrecht, Massachusetts Institute of Technology
professor and semiconductor materials processing expert Lionel Kimerling and
Icahn Enterprises CEO Keith Meister for Motorola's board.
Among other materials, Icahn is seeking board documents related to a
potential spin-off 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, who has been steadily increasing his Motorola position, disclosed in
a filing this month that he now owns 142,362,000 million shares, or 6.3 percent
-- up from 5 percent a month ago.
Icahn said in a letter to Motorola stockholders that the company "assured us
during last year's proxy contest that they had a plan to right the ship."
Instead, he said, the results in the cell-phone division "are a
stockholders' nightmare." He favors spinning off the division to stockholders as
a wholly separate company with a new CEO. The company has indicated it is
considering selling or spinning off the unit.
In January, Motorola told investors its net profit had fallen 84 percent in
the final quarter of the year and mobile phone sales were down 38 percent. The
company revealed its already diminished market share continued to fall as Nokia
and other competitors carved into its sales.
Former Motorola Inc. Chief Executive Ed Zander stepped down at the end of
last year under pressure from investors after a disastrous stretch that pushed
Motorola into third place in the global cell-phone market and caused it to lose
$49 million for the year.
Zander was succeeded Jan. 1 by Greg Brown, who the company announced in
February has assumed day-to-day responsibilities of the phone business.
Motorola shares rose 45 cents, or 4.8 percent, to close at $9.69.
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