Hedge fund manager Carl Icahn today sent a letter to Blockbuster Inc. (BBI, BBIB), telling the company he is resigning from its board effective Thursday, according to a regulatory filing.

Icahn, whose funds still own 16.9% of Blockbuster's outstanding class A shares and 7.7% of its class B shares as of Friday, said on a Securities and Exchange Commission Form 13-D that he's resigning because of Institutional Shareholder Services guidelines regarding how many directorships one person should have.

In the note, Icahn cited his earlier decisions to resign as a director at Yahoo Inc. (YHOO) and Motricity.

Icahn began building a stake in Blockbuster in late 2004 and 2005. He criticized the company's then chief executive John Antioco for an excessive pay package and for what he characterized as a bungled attempt to acquire rival Hollywood Entertainment Corp. Icahn eventually gained a board seat. Antioco left Blockbuster in 2007.

In his letter resigning from the board, Icahn told current Blockbuster Chairman and Chief Executive James Keyes that he's enjoyed working with Keyes and the board and that he will miss those relationships.

Blockbuster's stock price has gone from just below $10 when Icahn first took a stake to 45 cents at market close Friday.

Blockbuster and Icahn didn't immediately return calls seeking comment.

-By Joseph Checkler, Dow Jones Newswires; 212-416-2152; joseph.checkler@dowjones.com
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