Motorola shareholders' questions still unanswered

By Wailin Wong and Greg Burns | Tribune reporters

May 6, 2008

Frustrated Motorola Inc. shareholders arrived at Monday's annual meeting with plenty to vent about but left with few answers.

They peppered Chief Executive Greg Brown with questions ranging from the wisdom of the planned breakup to Motorola's seeming inability to follow the Razr's success with products like Apple's iPhone.

Brown repeated what he has told investors and analysts since taking the reins in January, saying that Motorola will have a more robust line of mobile phones by 2009 and that he believes splitting into two standalone entities is the best scenario for shareholders and management.

"I think oftentimes at Motorola, it has been a technology-led company, and we're taking steps now to be a consumer-led company," Brown said in response to an audience question.

Several shareholders blasted the board and management for the company's financial losses. Schaumburg-based Motorola's stock has tumbled 45 percent in the past year.

"You're not doing your job that you're paid for. Either put up or get out," said George Polous, a shareholder from Burbank.

One noticeable absence at the meeting: Carl Icahn, who owns a 6.3 percent stake in Motorola and pushed for seats on the board after a nearly successful proxy fight in 2007.

Under an agreement reached with Motorola in April, Icahn won two seats on the board. One of them went to William Hambrecht, CEO of investment bank WR Hambrecht & Co., who did not attend the annual meeting. The activist investor's lone representative was Keith Meister, a managing director of Icahn's investment funds.

With the addition of Meister and Hambrecht, the board has expanded by one director to 14 members.

Motorola's general counsel, Peter Lawson, said preliminary voting results showed that the slate of 14 board candidates was elected with 95 percent support.

The meeting ended without any public comment from the new board member. Meister declined to comment when approached after the meeting.

"I'm sorry [Icahn] wasn't here and I'm sorry his representative didn't say anything," said Mal Holec, a shareholder from Mt. Prospect who called the planned split a "cop-out" when he addressed Brown.

Former Motorola CEO Edward Zander is stepping down as chairman and will be replaced by David Dorman, the former CEO of AT&T and a Motorola director since 2006.

Motorola said in March it was creating two independent, publicly traded companies, one for its cell phone division and the other for its remaining two business units. The separation is planned for 2009, though Icahn has questioned that timeline.

Company executives have given few details on the search for a cell phone division CEO or on the breakup's process.

As the board moves on from Monday's vote, the 14 directors will have to integrate Icahn's allies and set the tone for the tough year of transition ahead.

Motorola is also trying to refresh its mobile phone portfolio with more products focused on touch screens, messaging and music. But the overhaul won't be visible until late this year and into 2009, meaning the company risks further giving up market share to competitors like South Korean manufacturers Samsung and LG Electronics.

After the meeting, some shareholders remained skeptical. Robert J. Cheever, a 25-year Motorola veteran laid off in 2002, doubted the switch to a consumer focus.

"I've heard it before," he said. "They are totally lost."

wawong@tribune.com

gburns@tribune.com