Carl Icahn is still dogging Motorola. On Monday, the billionaire investor said his investment company, the Icahn Group, filed a lawsuit intended to force Motorola to hand over documents related to its mobile devices business and use of corporate aircraft by senior managers, board members, and their families, Reuters and other news agencies reported.
Saying the information will help him determine what Motorola's board should have done to help the company right its ailing handset business, Icahn added that he intends to share it with shareholders, who recently have seen the departure of former CEO Ed Zander, the appointment of Greg Brown to the top spot, and several other excutive-level changes. The suit also is aimed at encouraging investors to elect Icahn's slate of candidates to the Motorola board.
"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 wrote in a note to investors. "We want to ascertain what the board could have done in the exercise of its fiduciary duty to assure Motorola stockholders that Motorola's statements and predictions were not incorrect."
"We demanded these materials," he added, "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."
Motorola has attempted at least a partial dodge of Icahn's advances. The Wall Street Journal, in a story published Tuesday, says that Motorola offered him two board seats--a gesture Icahn rejected.
Given Icahn's persistence, his rationale for making the company's handset division independent, and his growing clout with shareholders, the WSJ story points out, it's increasingly likely he'll realize his ambition to win four seats on Motorola's board.
Sprint Nextel said Monday that CEO Gary Forsee has stepped down as chairman and chief executive officer effective immediately.
(Credit:
Sprint Nextel)
Forsee's departure comes as investors, upset over the company's poor performance, have put pressure on the board of directors to make a change at the top.
The company said Chief Financial Officer Paul Saleh will become acting CEO until the board is able to find a replacement for Forsee. And board member James Hance, Jr., will assume the role as a non-executive chairman of the board, the company said.
Board member Irvine Hockaday said the company is focusing its search on candidates outside the company.
"We fully expect that the search will be concluded in a timely manner and we are focused on selecting the right candidate to guide the company to achieve its full potential," Hockaday said in a statement. "Sprint Nextel has the assets, spectrum, customer base and technology to be the leader in wireless mobility services."
In the same press release Sprint also revealed more subscribers losses for the third quarter. The company expects to report that it has lost about 337,000 post paid subscribers when it reports third quarter earnings on November 1. Post paid customers are ones who sign up for annual contracts and are billed monthly. The company also lowered its financial guidance for 2007.
Pressure has been building for months to replace Forsee as investors are becoming increasingly more agitated at Sprint's poor performance. Since Sprint acquired Nextel in 2005, making it the third largest cell phone provider in the U.S., the company's stock has declined roughly 27 percent.
Last week, activist investor Ralph Whitworth, who owns about 2 percent of Sprint's outstanding stock, told the Wall Street Journal that he had lost confidence in Forsee and expected to board to take action.
Among Whitworth's biggest concerns is Sprint's focus on building a next generation wireless network using a technology called WiMax. The company has committed itself to spending $5 billion by 2010 to build the network. Whitworth is concerned the company is not focusing enough on its core cell phone business, which has been steadily losing customers over the past few quarters.
Earlier this year, Sprint signed a deal to partner with a company called Clearwire to bring WiMax to even more cities. The two companies predict that together, by the end of 2008, they will offer mobile WiMax network access to about 100 million people.
How the management change will impact the nationwide WiMax network is still uncertain. But it's certainly possible that a new CEO could significantly scale back the aggressive plans.
A Sprint representative was unavailable for comment.
EarthLink, which is also struggling to sign up new customers for its Internet services, had a change of heart with regard to its Wi-Fi network plans when a new CEO came on board and assessed the situation.
I'll be taking a closer look at this issue in a follow-up story. So stay tuned.
It looks like Sprint Nextel's CEO Gary Forsee will soon get the boot, which could spell trouble for the company's WiMax network.
Sprint Nextel CEO, Gary Forsee
(Credit: Sprint Nextel)According to a story published by The Wall Street Journal late Thursday, the company's board of directors is fed up with Sprint's poor performance and they're laying the blame on Forsee and company.
The story didn't identify sources by name, but referred to "informed people" who said the board of directors had already launched a search for a new CEO in August. Several high-profile candidates have been approached for the job, the story said. And at least one has declined the offer. The board hopes to announce a new CEO by December, the story said.
CNET News.com contacted a Sprint representative, who declined to comment on the story or rumors that Forsee is being forced out.
Pressure has been mounting for months as investors become increasingly more agitated at Sprint's poor performance. Since Sprint acquired Nextel in 2005, making it the third largest cell phone provider in the U.S., the company's stock has declined roughly 27 percent.
Earlier Thursday, The Wall Street Journal reported that activist investor Ralph Whitworth said he had lost confidence in Forsee and was prepared to launch a proxy fight unless Sprint's board of directors did something. Whitworth owns about 2 percent of the company's outstanding stock.
Whitworth and others are disappointed with Sprint's inability to increase its subscriber base as fast as its competitors Verizon Wireless and AT&T.
One of Whitworth's biggest beefs with the company is its plan to build a nationwide high-speed wireless network using technology called WiMax. Whitworth told the WSJ that he felt this plan detracted attention from Sprint's issues in its core business.
Sprint has already committed to spending $5 billion by 2010 to build the network. And it's signed a deal to partner with a company called Clearwire to bring WiMax to even more cities. The two companies predict that together, by the end of 2008, they will offer mobile WiMax network access to about 100 million people.
But what happens if the new CEO pulls the plug on the Wimax plans? It's certainly a possibility. Just look at EarthLink. When the company's new CEO took the helm earlier this year, he wasted little time abandoning the company's ambitious citywide Wi-Fi plans. Within months, the company started backing out of its contracts.
While the issues surrounding Sprint are different, it will be interesting to see what becomes of Sprint's WiMax strategy when the leadership eventually changes. Will it survive, or will it wither and die as the company attempts to focus on its core business?
Activist investor Ralph Whitworth is continuing to put pressure on Sprint Nextel CEO Gary Forsee, according to the Wall Street Journal.
Whitworth, who owns about 2 percent of Sprint's outstanding stock, told the WSJ that he has lost confidence in Forsee. While he stopped short of asking for Forsee's resignation, he said he'd like to see the company's board of directors make some management changes to get the company back on track.
Whitworth is most concerned about Sprint's investment in WiMax, a wireless-broadband technology that would greatly increase data speeds. The company has committed itself to spending $5 billion by 2010 to build the network. Sprint said in August that it hopes it can also generate between $2 billion and $2.5 billion in annual revenue during this time. But Whitworth is concerned the company is not focusing enough on its core cell phone business, which has been steadily losing customers over the past few quarters.
While Sprint saw some improvement in the second quarter for attracting post-paid subscribers, overall the company has been struggling ever since its 2005 acquisition of Nextel communications. As a result, Sprint's stock has dipped 27 percent since the acquisition, the WSJ reported.
Whitworth has quietly been growing his stake in Sprint for months. In April, the WSJ reported he had about a 1 percent stake in the company. Now he has nearly 2 percent. Whitworth is seeking a seat on Sprint's board of directors.
Whitworth has seen success in pushing for change at other companies. He helped bring about Robert Nardelli's departure from Home Depot and helped push out Sovereign Bancorp CEO Jay Sidhu, the WSJ said.
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