Corporate raider Carl Icahn fire burning arrows into the Blockbuster’s tower yesterday during a teleconference call on quarterly earnings. The war of words with Blockbuster president John Antioco escalated the fight between the two corporate wizards.
Icahn inspired a bit of shock and awe when he called into the meeting as one of many callers with questions regarding Blockbuster’s earnings and its immediate direction. Mr. Icahn continued his attacks from previous weeks challenging the logic of the board when Antioco, as head of Blockbuster got a $50 million dollar bonus as the company went from making over $100 million last year to a first quarter loss of $57 million.
Icahn said, “You have mischaracterized what I’m trying to achieve here and we would want you accountable”
The current battle stems over the proposed direction of the video rental giant. Sales have been slipping as mega retailers like Wal-Mart have cheap DVD and VHS sales. Other companies like Netflix promote easy to deal with rentals through the mail. Blockbuster has had to change some of their offerings and come up with new programs like their current “no late fees” campaign.
Icahn wants to get he and a couple of others on the board to change its direction. They want to raise the dividend to stockholders. Icahn’s demand to raise dividends to $330 million would make operations much more difficult as based on the corporate structure and falls in video rentals. Icahn controls nearly 10% of Blockbuster’s stock.
Icahn raided the Kerr-McGee oil firm based in Oklahoma and forced the firm to spend $4 billion to buy back it’s stock. It landed Icahn’s firm a cool $57 million.
Antioco says he strategy is to build Blockbuster up as a brand and offer some different products instead of just sitting back and handing out money to the stock holders.
“This means if we were to sit back and do nothing we estimated our operating income would decline by $180 million per year,” he said in an LA Time article. Given that, Antioco said, Blockbuster would “have nowhere to go but out of business.”
John Stith is a staff writer for murdok covering technology and business.
