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[uboops <711894@xxxxxxxxxxxxxxxxxx>]

Hello,
Right, I have exactly the same behavior, so I can confirm this bug with Compiz.
I have tried the both ways under Ubuntu 10.04LTS up to date and this bug only occurs with compiz activated ( no problem with metacity, in this case the xterm window is successfully iconified).
Regards,
Uboops

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https://bugs.launchpad.net/bugs/711894

Title:
  iconic option does not work with compiz