If it’s Wednesday, it must be Motorola.Carl Icahn, who is juggling a number of activist investments right now, has upped his stake in Motorola again, to 9.9 percent. The iconic hedge fund manager bought more than 10 million shares in the past two days for $7.62 apiece.
Motorola stock is way down from its high of $26.20 hit in the glory days of October 2007. Icahn has had a position in the stock since 2007. It is probably not coincidental that Icahn is adding to his position a few days after Motorola —known for its cellphones and cable set-top boxes — reported 2010 second quarter results, which Citi Investment Research said “displayed solid execution across all fronts.”
Perhaps Icahn is excited by Motorola’s February announcement to break into two publicly traded businesses in 2011. One of the companies will include Enterprise Mobility Solutions and Networks while Mobile Devices and Home businesses will comprise the other company.
In July, Motorola also announced that it will sell its wireless network infrastructure assets to Nokia Siemens Networks for $1.2 billion in cash.
Motorola has also taken other steps to raise cash — or reduce spending. It suspended its dividend in 2009, and said it plans to freeze its pension plans and 401(k) contributions. These are the kinds of moves companies typically make in response to activist investors.
In research reports sent out late last week, Citi Investment Research and Standard & Poor’s (it has an independent research operation) each reiterated their Buy recommended on the stock and their $10 target price.
Meanwhile, Citi says it expects several catalysts over the next few months. The company plans to file a number of amendments to its regulatory filings related to the separation of the businesses, which will include details concerning cash allocation and capitalization.
The investment bank expects additional mobile product launches. It is expected more than 20 launches in 2010 involving the Motorola Android line. It is also anticipating a number of management presentations at conferences or with analysts.
“With solid progress being made in Mobile, stability in Home & Enterprise, and sale of beleaguered Networks business, we believe interest is picking up in MOT and expect incremental information flow that eliminates uncertainty to be a positive share catalyst,” Citi writes.
Also doesn’t hurt that Icahn has become a larger investor in the stock. Remember, several years ago Icahn threatened to launch a proxy fight with Motorola, until it agreed to place two of his recommended people on the Board. In late 2007, Ed Zander resigned as chief executive officer after facing heavy pressure from Icahn.
