I think the Motorola CEO should only act in the best interests of the shareholders and the company. I don't think he should cave in to pressure to spend on a stock buyback, if that spending doesn't ultimately benefit the shareholders or the company. Although I am not familiar with all the specifics, this type of move seems like more stock manipulation, which is the last thing we need.
As CEO of Motorola, it is the duty of Edward Zander to resist all pressures from outside sources. It is Mr. Zander's job to do the will of the shareholders, not that of an activist. If the majority of shareholders agree with Carl Icahn, then Edward Zander should pursue such avenues, as it will then be the will of the shareholders.
As the CEO of the company it is ultimately his or her goal to do what is best for its employees and investors. If the CEO is being pressured and succumbs to it, it shows that he or she is weak and is not the right choice for the job. Being in the powerful position of CEO, he or she should be able to make decisions based on their analysis.
I think it is important for companies who are doing well to spread around their wealth, and to do so by continuing to repay those who have invested their money or time into making that company great. Stocks are a way for a company to give back to those who are willing to invest in them, and to tell those people, "thanks for your money, but you can have it back now, because we don't need you anymore", is basically what a stock buyback does.
I agree that the CEO of Motorola, Edward Zander, should resist Carl Icahn's pressure to spend money on a stock buyback, because there are better ways to spend that capital. For example, putting that money into research and development would encourage greater profits in the future. Whereas a stock buyback only artificially boosts the stock price, and benefits former investors who have been bought out.
I believe that Motorola's CEO should resist activist investor Carl Ichan's pressure to spend the electronics profits on a stock buyback. Why? By spending all of the company's money/profits on a stock, and considering the current state of the economy, there is a very good chance that Motorola could go bankrupt after losing all of their profits by betting on a stock. It's too risky right now, and I believe that they should wait until the market recovers a little more before investing anything anywhere.
Though in the short term a stock buyback may boost stock price thereby providing a quick profit to select major investors, a COMPANY CAN GAIN A LOT by utilizing the "on hand cash" to grow from within, invest in new ventures, and even hold onto the cash for bad periods. Perfect examples are right in front of our eyes; companies like Apple and Google who are loaded with cash have been able to grow despite the bad economy.
Running a business is always tricky, but especially in this economy. Big corporations also have some luxuries and some challenges. One luxury is to be offered money by banks or to be given opportunities to get out of their situation. One challenge is to make the best choices for the long term while taking good care of employees and keeping the "product" of good quality. The best choice in my opinion at this time is wait and search for other options besides the current stock buyback one.
The stock buyback option would be a bad idea because of the state of the economy. The company would be better off using the funds to reinvest back into its technology sector, in order to strengthen its hold against other companies. By reinvesting back into its technology division, it can develop new technology and products to be more competitive against the competition.
They should have a stock buy back program because, that way, they will own more of their own company and, if needed, they would have those shares to sell again at another date. If they have the capital to buy back their stocks, then it would be a smart move on their part.
As Edward Zander continues to support such resistance, it could produce unhealthy effects on the economy, since investor relations should not be underestimated, and should not be ignored.
I believe our stock market will bounce back. Right now is the perfect time to regain or re-buy stocks, because they are at such a rock bottom price right now.
Because Motorola has the cash, and has used a lot of it to already invest in the company, why shouldn't they do a stock buyback to regain some control over their own company? They can always reissue the stocks. But, I believe in Icahn's ideas and think that it would be great to see them implemented.
This type of purchase can assist with using up excess cash that is sitting in a company's account. Research shows companies with a lot of cash are more attractive to another company or individual looking for a takeover. However, when a company buys back its own stock they will receive a more profitable return on investments.