Motorola vs. Icahn Under Way

The tech giant formally opposes the investor's proxy fight.
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Motorola (MOT) isn't exactly embracing the shareholder activist movement.

The Schaumburg, Ill., tech titan told shareholders to block any attempt by Carl Icahn to gain a seat on the company's board of directors.

Motorola says it has received a notice from Icahn Partners Master Fund LP and High River Limited Partnership for the nomination of "Mr. Icahn to Motorola's board of directors at the annual meeting," according to the company's proxy statement filed Friday.

"The board urges you to not sign any proxy cards sent to you by the Icahn affiliates," the proxy reads. "Mr. Icahn's nomination has NOT been endorsed by your board of directors."

Icahn already owns a 1.3% stake in Motorola and his affiliates have filed plans to acquire more than $1 billion worth of additional stock. The hard-charger would likely want to direct some of the company's $11.2 billion cash toward shareholders through big stock buybacks.

Motorola fortunes have dropped sharply after an all-out scramble to gain market share caused the company to slash prices on its phones at a time when the iconic Razr was falling out of fashion. The former handset chief Ron Garriques fled to

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last month and the business continues to swoon.

At an investor conference last month, CFO Dave Devonshire said the outlook was "rocky," and he could not promise that mobile phone operating margins would remain positive.

In a research note Monday, JPMorgan analyst Ehud Gelblum alerts investors that Motorola is headed for a warning.

"Handset fundamentals appear to have deteriorated midquarter, leading us to believe Motorola could actually even negatively preannounce first-quarter results," Gelblum writes.

It seems the only thing the stock has going for it at this point is Icahn. Instead of fleeing, investors might stick around for a big round of share buybacks.

Motorola shares were down 14 cents to $18.50 in early-morning trading Monday.