Professor Elam

Carl Icahn is demanding a breakup of Motorola MOT. This is an excellent story to help you understand the equity side of the balance sheet. 

Icahn is described in this BW article as famous for taking a stake and demanding change in a company.

This is a practice that gained prominence in the 1980s Corporate raiders, flush with cash from Mike Miliken’s junk bond money machine would amass a stake in a company. Then they would demand changes to get the stock price up. The company would either have to change or buy the ‘raider off’. Otherwise as Mel Brooks so famously remarked in one scene of Blazing Saddles, gentelmen we may lose our phoney baloney jobs! This practice was also known as greenmail rather than outright blackmail.

MOT stock is now down to $10.  It is a famous player in the chip and mobile phone market, who will win here, will MOT get split up? This also shows how important managerial accounting is to a company, the failure to perform in the short run can have the raiders knocking on the door.