Motorola, Inc. (NYSE: MOT) warned shareholders today that it has not endorsed activist investor Carl Icahn’s nominees for its board as the troubled company’s annual meeting approaches. However, a growing number of dissident shareholders alongside a plummeting stock price has his odds of a successfully proxy campaign running pretty high. Motorola shares nearly halved since shareholders last rejected Icahn’s bid for board seats to under $10 per share. So, are shareholders ready for change and is Carl Icahn the right man to bring it?

Carl Icahn recently revealed a 6.3% stake in Motorola via a Schedule 13D/A filing, which may indicate that he believes in his odds this time around. The activist investor plans to continue pushing the company towards spinning off its handset division into a standalone company to be led by an outsider. Motorola’s attempt to shop the division have failed and now this appears to be the only option, but many analysts are concerned that a sale now would not obtain full value for its core division. Icahn’s planned spin-off may circumvent this problem by allowing the company to get rid of the division while still retaining a stake that could be held until a successful turnaround takes place.

The problem is that this turnaround could take some time. Motorola’s handset division continues to struggle with declining market share and lower earnings as it loses its dominant edge gained by record sales of the Razor. Now, many service providers are expanding their offerings to include other handset makers like Nokia which could further erode their market leadership. Meanwhile, this slow in growth combined with tight credit has led to no strategic or financial suitors for the division. As a result, investors who were looking for this quick fix are now realizing they may face a long road ahead and began selling off shares.

Carl Icahn now faces increased odds of successfully obtaining valuable board seats that he promises to use to aggressively pursue his agenda. A spin-off of the handset division would likely unlock at least some value in the company’s shares while the excess cash could be used to fund further share repurchases to boost earnings. Meanwhile, any meaningful turnaround in its growth could also expand its multiple and turn this stock into a big with for the activist investor. Whether or not he can pull it off remains to be seen, but this is a situation that is definitely worth watching closely over the next few months!

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