Motorola Needs to Stop Shooting Itself in the Foot

Motorola Inc.’s (MOT) shareholders failed to put Carl Icahn onto the Board. The proposed slate of investors appears to have been voted in as per the wishes of the current senior management team. Carl Icahn has been very vocal about the need to fix things quickly and was looking at the board seat as an ideal vehicle to champion his views.

The directors may see a Board without Carl Icahn as a victory. In actual fact, the board just has used its last Get Out of Jail Free card. Its members need to turn the company around and make the market believe that it is really happening. Motorola has been described as a company that never misses an opportunity to shoot itself in the foot - the short term good news is that they may be out of bullets. They need more than just another good product; they need to make the market believe that they have the momentum.

But right now, no one really believes that. So watch for some mergers and acquisitions. CEO Ed Zander will need to change the entire look of Motorola by buying into other products and companies and merging its way out of the current dilemma.

My prediction will be a take-over of Nortel Networks (NT). Nortel seems to have solved its internal financial reporting problems and is showing signs of resurgence. Motorola could still pull it off before Nortel’s phoenix rises too high. The combined entity would jolt the old Motorola away from current vexations. As Nortel becomes more valuable within the telecommunications equipment markets, it will become a take-over target as well.

Think about it, Mr. Zander. Just releasing another hot phone that replaces the RAZR is probably not going to save your bacon.

See also: Motorola: Hard To See Downside Following Icahn's Failed Board Move

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