Motorola stock up after Icahn files to buy shares

NEW YORK (Reuters) - Shares of Motorola Inc. (MOT.N) rose more than 3 percent on Thursday after the company said it received notice that Carl Icahn filed to buy more than $2 billion worth of stock in the No. 2 mobile phone maker.

Motorola shares were up 59 cents at $19.11 on the news even though Motorola's annual report issued late on Wednesday confirmed it would have a tough first quarter, Oppenheimer analyst Lawrence Harris said.

Instead investors were focusing on Icahn and betting that he would increase value for shareholders.

"I think they see him as a potential catalyst, some one who could drive the company to increasing the share buybacks," Harris said in an interview.

But Harris said in a note to clients that his enthusiasm was tempered by Motorola's disclosure in its annual report that its order backlog for mobile phones fell to $1.4 billion at the end of 2006 from $3 billion a year before.

In January Motorola posted weaker-than-expected earnings and revenue as it faced tough competition for its most advanced phones and for cheap phones in emerging markets.

Icahn said in late January he had taken a 1.6 percent stake in Motorola and intended to seek a board seat with the aim of convincing the company to accelerate share buy-backs. The filing could increase his holding to about 6 percent.

But Harris said he was doubtful Motorola would take on a hefty debt burden to do Icahn's bidding.

Citing reports that Icahn wants Motorola to buy back $12 billion to $15 billion in stock, Harris said that given its "current net cash position of $6.9 billion" this would require it to take on billions more debt.

"While we would envision the company being willing to discuss with major shareholders the pace and exact size of the current program we personally don't believe that the company would be interested in adding significantly to the current debt level," Harris said in a noted to clients.