Motorola may fight to keep Icahn off its board

Motorola Inc. may be preparing for a fight to keep billionaire activist Carl Icahn off its board.

“Mr. Icahn’s nomination has not been endorsed by your board of directors,” the company said March 2 in its notice for the 2007 shareholder meeting. “We urge stockholders not to sign any proxy card that you may receive from the Icahn entities.”

The comments suggest that Motorola may stand up against Icahn as he presses Chief Executive Ed Zander to use all of the company’s $11.2 billion in cash to buy back stock and reward investors. Motorola may want to set aside funds to roll out new phones and bolster profit margins as competition mounts.

“Motorola management doesn’t want to be as aggressive in buybacks as Mr. Icahn suggests,” said James Faucette, an analyst at Pacific Crest Securities in Portland, Ore. “They need the flexibility for acquisitions, and having cash on the balance sheet facilitates that.”

The Schaumburg, Ill.-based handset maker said it didn’t know whether Icahn’s group would nominate him at the meeting or seek investor support from proxy votes. Icahn hasn’t filed a proxy statement to shareholders, Motorola spokesman Paul Alfieri said.

Icahn was unavailable to comment, assistant Susan Gordon said.

Motorola shares dropped 14 cents to $18.50.

Motorola disclosed in January that Icahn, 71, had demanded a seat on its board after the company posted a 20% drop in 2006 profit. The founder of Icahn Partners said last week that he planned to buy about $2 billion of Motorola stock, stepping up pressure on Zander.