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Carl Icahn, Motorola, Rupert Murdoch, News Corp.: Doing Business

Read more articles on Finance and General Management.

May 15, 2007

Posted by neillevine

About This Editor: I am a writer. Have been writing for other sites, but expect to do most of my future work HERE! My expertise extends from the esoteric such as burning hydrogen to the unpredictability of the stock market and my writing makes me a jack of all trades and exasperated master of none. I have had some influence over national wildfire and water policy and there are hints of a change in energy policy, BUT as Samuel Goldwyn once said, "A verbal promise is not worth the paper it is written on."

         

There are three ongoing business stories that are intriguing enough to write about.

First, Carl Icahn, sometimes called an activist investor and sometimes called a corporate raider by the media, wanted to join the Motorola, MOT, Board of Directors. But Ed Zander, the current Motorola CEO, opposed him on the grounds that he did not have a background in communications or anything that Zander was interested in or considered beneficial to Motorola, other than investing, that would help earn the company more money.

As a result, Mr. Icahn was not elected, although he has had some recent business successes including selling four Nevada casinos to an affiliate of Goldman Sachs, engineering the acquisition of MedImmune, a vaccine specialist, by AstraZeneca, a multinational pharmaceutical company looking to expand its immunization capabilities, and jawboning Dick Parsons, the head of Time Warner, to do some things like buying back enough shares to get a decent rise in that stock. Mr. Icahn is also trying to take over luxury home builder WCI, with that company’s CEO, Jerry Starkey, and its Chairman, Don Ackerman, opposing him on the grounds he “is being disruptive at a time they are seeking another buyer.” One issue for all investors is that if Mr. Icahn acquires the company for $22 a share and then turns around and sells it for a higher price, he gets the lion’s share of the profit, whereas if the company is sold for what are listed as current shareholders the profit is divided amongst the various shareholders.

Since either the current management or Carl Icahn can engineer a sale, acquisition or merger, this saga not only is an intriguing example of competitive bidding, but also shines a light on how money is made by investing in stocks.

Because he is a large shareholder, Carl Icahn makes money even if his offer for the company does not succeed, surely a winning hand if ever there was one.

In contrast, Rupert Murdoch has spent his career running News Corp., NWS. The large media company. Mostly, he acquires assets such as a baseball team or newspapers or a satellite broadcaster, increases sales or, in the case of the Los Angeles Dodgers, creates regional sports networks and goes on to his next deal. In the case of baseball, he did not find running a team to be his style so he sold the baseball assets and went on to his next big deal, in this case, the saga of how to conquer Dow Jones and The Wall Street Journal. His game plan is to use the brand to supply content and to boost ratings for a new business cable channel. Think of Maria Bartiromo or Consuelo Mack on the WSJ Report, not once a week, not a mere half hour, but 24/7 and 365 and 1/4.

Finally, there are stories about Yahoo, YHOO, and Microsoft, MSFT, coming up with a deal to better compete with Google, GOOG. Any combination of their web assets would save money, but the real problem is how to better compete and there is no suggestion that they are going to come up with anything right away so the stories appear to be mere business hype rather than a substantial change in strategy.