ILLUSTRATION13.2:TheValueofChangingManagement:
Blockbuster
In April 2005, Carl Icahn shocked the management at
Blockbuster, the video rental company, by contesting the
management slate for seats on the board of directors. He
arguedthat Blockbusterwaspoorly managed and run,and
couldbeworthmorewithsignificantmanagementchanges.
Althoughincumbentmanagementcontestedhimonthisissue,
Icahnwasabletogetenoughstockholdersupporttogethis
representatives elected to the board.
LookingatBlockbuster’s 2004 financialstatements,thereisa
clearbasisforstockholderdissatisfactionwiththecompany.
Thecompany’srevenueshavestagnated,goingfrom$5,566
millionin 2002 to$5,912millionin 2003 to$6,054millionin
2004.Evenmoreominously,thecompany’soperatingincome
hasdroppedfrom$468.20millionin 2002 to$251.20million