Why Icahn Made His Motorola Move

Carl Icahn's decision to increase his Motorola stake underscores the phone maker's growth potential.
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SCHAUMBURG, Illinois (

TheStreet

) --

Motorola

(MOT)

is in the spotlight after activist investor

Carl Icahn

snapped up

an additional $86 million worth of the phonemaker's shares

, underlining the compay's growth potential.

The purchase takes Icahn's stake in Motorola to 10.4%, according to

The Wall Street Journal

, and highlights the company's momentum in the fiercely competitive smartphone space. Icahn's move comes at a time when Motorola is undergoing a major metamorphosis designed to boost its smartphone sales.

Motorola is in the process of splitting into two companies -- one for networking equipment, the other for mobile phones and TV set-top boxes. Last month, the gearmaker also announced a deal to

sell most of its wireless network infrastructure assets to Nokia Siemens Networks

for $1.2 billion.

Despite intense competition, Motorola's phone business is already enjoying success. The company

expects to sell 12 million to 14 million smartphones in 2010

and recently launched the

Google

(GOOG) - Get Report

Android-powered

Droid 2

phone.

Sold via

Verizon

(VZ) - Get Report

, the Droid 2 offers twice the speed and memory of the original Droid phone and is already being cited as a

major positive

for Motorola and its investors.

Motorola is also preparing to

launch its Droid Pro phone

later this year to challenge

Apple's

(AAPL) - Get Report

popular iPhone 4.

Analyst firm NPD Group recently reported that

Android had overtaken Research In Motion's (RIMM) BlackBerry OS

as the most popular U.S. smartphone operating system, thanks partly to Motorola.

Motorola shares crept up 2 cents, or 0.27%, to $7.52 in Friday trading, mirroring the modest advance in tech stocks that saw the Nasdaq gain 0.38%.

--Written by James Rogers in New York.

>To follow the writer on Twitter, go to

http://twitter.com/jamesjrogers

.

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