Icahn Sues for Motorola Board Records

CHICAGO (AP) -- Motorola Inc. on Monday dismissed as an "unnecessary distraction" billionaire investor Carl Icahn's legal efforts to force it to turn over documents about its executives and its cell phone business.

Icahn plans to use the material in his battle to win four seats on the Schaumburg-based company's board. Motorola prevailed in a similar proxy battle with Icahn a year ago.

"Over the past 12 months the statements and predictions of Motorola's management and the board about mobile devices business have too often proven to be wrong," Icahn said in a statement.

Icahn sued the company for the documents Monday afternoon in the Court of Chancery of the State of Delaware.

"We demanded these materials for the purposes of enabling us to investigate whether and to what extent the board of directors of Motorola failed in their duties as directors in supervising management and setting policy and direction of Motorola," he said.

Motorola said it rejected Icahn's "demand for extensive access to its books and records" earlier this month on the belief that he does not have a credible basis to request such an inspection.

"Motorola had offered Mr. Icahn access to information concerning Motorola pursuant to a customary confidentiality agreement, but Mr. Icahn chose not to avail himself of that opportunity and instead seeks to create further unnecessary distraction," the company said in a statement.

The investor has nominated former Viacom Inc. CEO Frank Biondi, WR Hambrecht & Co. founder and CEO William Hambrecht, Massachusetts Institute of Technology professor and semiconductor materials processing expert Lionel Kimerling and Icahn Enterprises CEO Keith Meister for Motorola's board.

Icahn said in a story posted late Monday on The Wall Street Journal's Web site that Motorola offered to seat two of his nominees on the board, but excluded Meister from the proposal.

Icahn called Motorola's rejection of Meister "intolerable and reprehensible" and said he turned down the offer, the Journal reported.

Icahn did not immediately return a call from The Associated Press.

Motorola spokeswoman Jennifer Erickson said the company was not commenting on its discussions with Icahn.

In his lawsuit, among other materials, Icahn is seeking board documents related to a potential spin-off of the cell phone unit, the service and selection of Motorola's senior officers and materials related to the use of company aircraft by senior management, board members and their families.

Icahn, who has been steadily increasing his Motorola position, disclosed in a filing this month that he now owns 142,362,000 million shares, or 6.3 percent - up from 5 percent a month ago.

Icahn said in a letter to Motorola stockholders that the company "assured us during last year's proxy contest that they had a plan to right the ship."

Instead, he said, the results in the cell-phone division "are a stockholders' nightmare." He favors spinning off the division to stockholders as a wholly separate company with a new CEO. The company has indicated it is considering selling or spinning off the unit.

In January, Motorola told investors its net profit had fallen 84 percent in the final quarter of the year and mobile phone sales were down 38 percent. The company revealed its already diminished market share continued to fall as Nokia and other competitors carved into its sales.

Former Motorola Inc. Chief Executive Ed Zander stepped down at the end of last year under pressure from investors after a disastrous stretch that pushed Motorola into third place in the global cell-phone market and caused it to lose $49 million for the year.

Zander was succeeded Jan. 1 by Greg Brown, who the company announced in February has assumed day-to-day responsibilities of the phone business.

Motorola shares rose 45 cents, or 4.8 percent, to close at $9.69.

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