By : Erik Gruenwedel | Posted: 01 Feb 2010
Maverick investor Carl Icahn has resigned from his seat on Blockbuster Inc.’s board of directors, the Dallas-based No. 1 DVD rental company said Feb. 1.
Icahn made the announcement effective at the close of business Jan. 28.
Icahn, who famously waged a proxy battle with former Blockbuster CEO John Antioco five years ago that lead to the placement of three hand-picked board members and Antioco’s eventual departure, cited federal regulations regarding the number of board seats he can hold for his departure.
The billionaire investor’s departure comes at precarious time for Blockbuster, which has seen its shares plummet nearly 50% in recent weeks after it revised downward for the second time fiscal year pre-tax earnings estimates.
Indeed, Icahn, who owns 16.9% of Blockbuster’s Class A shares and 7.7% of its Class B shares, has seen the company’s stock plummet from around $10 per share, when he first began investing in Blockbuster, to less than 45 cents per share last week.
Blockbuster CEO Jim Keyes told The Dallas Morning News that Icahn was a “valuable director and a tremendous resource to the board and the management team.”
Despite online chatter indicating Icahn’s departure signaled the end for Blockbuster, the company’s shares were up two cents to 47 cents per share in midday trading.
Edward Woo, analyst with Wedbush Morgan Securities in Los Angeles, was surprised by Icahn’s departure, considering his ownership stake in Blockbuster.
“You would think that he would still care a lot,” Woo said, adding the resignation implies that Icahn’s priorities (and attention) are elsewhere.
“Given the recent pre-announcement by Blockbuster, the potential bankruptcy again of Movie Gallery, and the strength of Redbox and Netflix, things are looking rather tough for Blockbuster,” he said.
Despite the ominous signs, the Blockbuster’s shares were up two cents to 47 cents per share in midday trading.