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Carl Icahn Takes on Yahoo's Board
narramissic and several others have written to point out that Carl Icahn has initiated a proxy battle with Yahoo's board of directors over their rejection of Microsoft's bid for the company in February. Icahn has purchased millions of Yahoo shares over the past week and assembled a group of nine other investors (including Mark Cuban) to persuade the board to resume talks with Microsoft. Yahoo remains unimpressed. Icahn's letter to Yahoo accuses:
"It is unconscionable that you have not allowed your shareholders to choose to accept an offer that represented a 72% premium over Yahoo's closing price of $19.18 on the day before the initial Microsoft offer. I and many of your shareholders strongly believe that a combination between Yahoo and Microsoft would form a dynamic company and more importantly would be a force strong enough to compete with Google on the Internet."
... having boatloads of cash doesn't make you smart. Icahn is an idiot if he believes that a) Yahoo and MS can merge peacefully, and b) Yahoo brings anything other than a brand to MS. MS doesn't want anything other than Yahoo email users, Yahoo portal users and Yahoo search engine users. Note to MS: users come and go. You tried it before with various other web companies, and it didn't work then. It won't work now.
Those who can, do. Those who can't, sue.
I'm not even convinced that this is a legitimate play by Icahn to make MS/Yahoo be more competitive with Google. If I'd have a billion dollars to invest, and I'd know that a merger would pump a company's stock price by 72%, I'd try to buy enough influence to make that happen. Icahn would make out like a bandit even if MS/Yahoo go down in flames the day after the deal is signed.
Those who can, do. Those who can't, sue.
If Microsoft does to yahoo what it did to hotmail and other companies, google's number 1 competitor is history.
I can only imagine what would happen by taking yahoo's infrastructure off free bsd and putting it on windows.
Google might just be loving this.
Contrary to popular belief, Unix is user friendly. It just happens to be particular about who it makes friends with.
I had given up hope that Microsoft would fire their legendary footgun at a Microwho? deal. I hope they blow all their available cash on this.
The synergy of this opportunity rivals a .com bubble for the ability to vanquish vast quantities of value.
Now I can look forward to reading about this in the news.
Help stamp out iliturcy.
Though luck Icahn, betting on a single stock is stupid, go back to your books and study what "idiosyncratic risk" means.
Of course, with Icahn really pushing this, there's no real reason for MS to come back with a stellar offer. Look at them walking in to buy yahoo for peanuts. Should be telling, if they do, icahn is embarrassed by it. If they do, and icahn's still pushing hard, start looking into whatever side deals MS might have made with icahn through proxies. Wouldn't put it past MS to offer a good deal for show, then buy yahoo for peanuts once they signed on a patsy.
Either way, if yahoo can't fight this somehow, they're done. Nobody that has a clue is going to stick around hoping MS gets this one right. If people wanted to play with MS, hotmail and others would have been an automatic winner, and this wouldn't even be an issue.
As with a previous poster, I hope this puts a nice dent in their wallet, and burns them all. Not just because MS needs a rung kicked out, but as an example to other companies that buying out the competition in order to destroy what made it competition, is a stupid idea.
Microsoft has just released their much anticipated hands-free cordless mouse. Warning, it may hurt a little at first.
Agreed; this deal has gotten so much publicity that the price of YHOO is wildly affected by really irrational, speculative investor assumptions ("It's Steve Ballmer! It's Microsoft! Of course they'll get their way!"). Personally, if I had been holding onto YHOO stock before the deal was announced, I would have dropped it immediately as soon as it hit $30/share and enjoyed something like a 100-200% gain.
...the big cheese until a couple of guys in a garage fucked it up for them. Yahoo failed to adapt.
Microsoft was the big cheese until they fucked it up themselves by releasing an unstable (moreso than they usually do) product. They'll probably fail to learn their lesson.
Merging a company full of fuckups with a company full of fuckups will still give you a company full of fuckups - just bigger. Even so, Google doesn't have its own OS, and that would significantly contribute to Yahoosofts's power. (I'd say Microhoo, but it sounds dirty.)
Random Thoughts From A Diseased Mind (Not For Dummies)
investers were investing in the long-term health of the company. Dividends were the method they gained as the company did better.
Now it's a complex poker game and you aren't buying shares because the company will do well but so that you can sell those shares on quickly and make a profit.
Which isn't *necessarily* wrong except that, since this money is not gained from the output of the company, can only come from the poor investment choices of other people.
In other words, it concentrates the wealth into the hands of the wealthy.
My wife tried to register big_trash as a user name for Yahoo email. But that name was already taken.
Why is it that I know a merger between Yahoo and Microsoft won't be successful, but Steve Ballmer doesn't? Microsoft has proven, over many years, that it does not know how to run a search engine. Yahoo has proven, over many years, that...
When a mediocre, adversarial company merges into an another mediocre, adversarial company, what will be the result? Cute puppies?
It has been reported that Yahoo employees are against the merger. Maybe that is because many of them will lose their jobs.
Wait - where do you think you were posting this, on a Yahoo!Groups forum?
This is Slashdot, for heaven's sake - the most popular place on the Interweb where one of the world's richest men can take the billions he has personally earned as the Former CEO of one of the most successfull software companies in the world and give it away to save lives and fight HIV/AIDS and a host of other diseases that kill millions of children each year...and be called "evil".
--ScottKin
I don't give a rat's behind about "karma" here or anywhere else. Don't like what I have to say here? Deal with it!
MS wants Yahoo primarily so it can infect everyone's Windows PCs with its Silverlight technology (which was dubbed the "Flash Killer"). That won't happen due to this initiative: http://www.adobe.com/openscreenproject/ Give up MS, you are destined to become a Linux software development company. The MS Windows era is coming to an end. Hypnotic dreams of Switzerland are calling to you Mr. Balmer... shortly it will be time to materialize those dreams.
Actually squirrelling it away in the bank makes a lot of sense from a tax perspective. If they distribute it as a dividend it gets taxed as dividend and as income. If they squirrel it away in the bank it raises the price of the stock by a reasonable amount represented by the expected return they are receiving. That gain is taxed at the capital gains rate which is substantially lower. Of course, this is one good reason to not have dividends tax as it encourages squirreling instead of releasing profits to shareholders.
It would be more accurate to say he sees it as a way of making an enormous quantity of money in a very short time. Whether or not that would happen to screw a bunch of people is really not of any consequence to him.
You have to understand the economics of the situtation to understand why this would probably be a good combination. Yahoo has a very large web audience, but has had difficulty generating advertising revenue from it, i.e. its technology isn't very good, so it isn't making as much money selling advertising as it otherwise could. Microsoft has the opposite problem, i.e. good technology that can convert traffic into advertising revenue, but it was much too late to the game, so it lacks a sufficiently large audience, and there's no reason for Yahoo or Google users to switch (even assuming Microsoft's content is as good, which is questionable).
A Microsoft/Yahoo combination (assuming it's even on the cards any longer from Microsoft's view) would allow Microsoft to replace Yahoo's ineffective technology with Microsoft's superior technology, whilst keeping Yahoo's popular content and websites. Google already has both high traffic and the technology to generate a high amount of advertising revenue from it, which is why Microsoft and Yahoo really can't compete in advertising on their own: Microsoft needs a bigger audience and Yahoo needs better technology. This is the logic behind Yahoo's approach to Google too (i.e. combining Yahoo's audiences with Google's superior advertising technology), but it's nevertheless insane from a business point of view, because in almost every area Yahoo operates, Google is its chief competitor. It really looks like a principal-agent issue, with Yahoo management more interested in securing their own power than in doing what's best for the shareholders who employ them.
If the Yahoo employees behind the company's lagging technology are less than thrilled about a Microsoft takeover, I can certainly understand why: Microsoft have no need of Yahoo's inferior technology, only its audience, so a lot of Yahoo engineers are surplus to requirements. At best these engineers will end up working on technology designed by someone else (i.e. Microsoft's current technology), and at worst they'll lose their jobs. That doesn't mean the deal doesn't make a huge amount of sense for Yahoo shareholders, and the long-run viability of Yahoo as a whole, which it does. If Yahoo continues to be run by inept management, and continues to use technology that isn't competitive with its rivals, it's only a matter of time before it fails, and then these employees will lose their jobs anyway.
Because for every million in cash he donates he donates 3 million in windows XP licenses.
Take a good long look at what the that foundation donates. a decent percentage of it is is windows software which costs bill G nothing to make another million copies of. He then writes off the full retail (not OEM, but retail) value of the software. As if someone was buying boxed copies of the software.
the Oil tycoons, and steel tycoons of old at least built things that the public could visit, and use. Bill G is too cheap to even do that much.
i thought once I was found, but it was only a dream.
Heh, you act like the 80x return was 100% certain at the time. If. Only.
Really Icahn is the vermin here?
What about the Yahoo board asking 40 USD? What about Jerry Yang who rejects 33 USD and does not even take that to the board?
What ICahn is doing is telling Yang to go take a flying leap. I think Icahn is right here.
Yang let his emotion of hating Microsoft get in his way of business. If Yang had owned 51% of the shares then that is his right. BUT Yang owns about 43 million shares of 1.4 billion. This means he can say squat on what "his" company can or cannot do.
"You can't make a race horse of a pig"
"No," said Samuel, "but you can make very fast pig"
Sorry, that's just flat out wrong. There are numerous ways in which Google could use its monopoly power to prevent competition and extract surplus from its customers.
Google is essentially a platform (in the economic, not software sense) connecting advertisers with a well-profiled target audience. Importantly, it is this large and well-profiled audience that is of value to advertisers, so a competitor without this can't offer a competitive product, no matter how good the underlying software is, or how low the price is. Moreover, there are undoubtedly some switching costs for advertisers who have invested in Google's technology.
On the other side, Google's extensive database of search activity allows it to optimise its search algorithms in a way that competitors without such audiences cannot. By analysing which links users follow after performing a search, for example, Google can produce better algorithms. Better algorithms produce better results, which means Google can offer a better service than competitors with smaller audiences. Similar effects may stem from website partnerships and advertising itself. Websites that partner with Google for search benefit from the large number of advertisers, and at the same time such partnerships allow Google to improve its search results, attracting a larger audience and increasing the value to advertisers. Consumers may also gain utility from receiving targeted advertising for products they're interested in, compounding this effect.
Overall, based on the logic outlined above, it can be said that the value of the services (advertising and search) offered by Google is increasing in market share, at least up to a critical level (e.g. the value may increase rapidly up to say 25% market share, and then remain relatively level after that). Given this, as well as switching costs, etc., Google clearly has some monopoly power. This means it can control prices by restricting the amount of advertising space available to customers to the profit-maximising level, reducing economic efficiency and overall welfare. It's a typical dominant firm situation, and the real question is whether or not a more oligopolistic structure (i.e. two or more strong rivals instead of one very dominant firm) would be better or worse for total welfare. My guess is that both would be able to operate at efficient scale, so it would be better overall for welfare and economic efficiency, but worse for Google. The tricky part is for a competitor to somehow break into the market. Yahoo and Microsoft may have a shot at it together, but I doubt either can do it alone (hence Google's frenetic attempts to block a Microsoft takeover of Yahoo).
Don't be so fucking daft.
Osama Bin Laden gives money to orphans that doesn't make him a saint.
Giving money away doesn't undo what you have done.
evil is as evil does
Microsoft + Yahoo = MicroHotHoo :)
.. :)
Not exactly, remember they were in the search and email business before Google. MS strategy for success is invariably, buy up some vibrant company, like Hotmail, re brand it as Microsoft Whatever, use the Windows desktop monopoly to leverage it. Eg, every software update, installs Outlook, adds Microsoft affiliate web sites to Favorites and makes Microsoft.com your home page.
Design Microsoft services to make using third party services a jolting experience. Eg. Disable links to Youtube.com, filter third party greeting cards in Outlook and so on.
Present the ubiquity of such Microsoft product as evidence of the popularity of same. It must be good, everyone chooses it
davecb5620@gmail.com
Are you fucking serious? Osama Bin Laden KILLS PEOPLE.
How fucking out of touch do you have to be to compare Bill Gates to Osama Bin Laden?
He's called "evil" because he got his money by
The guy's an ass who's held computing back for the last 25 years through actions that'd get you and me imprisoned, or at least run out of business.
By your logic, it doesn't matter how he got his wealth as long as he gives a little bit away. Well, nuts to that. Warren Buffett's doing pretty OK for himself and I'm unaware of any similar allegations against him.
It's OK that Bill's fake-donating money to charity, but he's still an ass.
Dewey, what part of this looks like authorities should be involved?
Good technology will be successful on its own merits, especially with a company like MS funding it. You could make a decent argument that Google was late to the game, when they came on the scene Yahoo was already well established, and there were other players like Altavista.
Google didn't win by somehow levering legions of users, they won by having better search technology that convinced people to move.
If MS has a better search engine than Google, then why doesn't anyone know about it? It's not like MS is some obscure company that's new to the scene. And beyond searching, what other web "technologies" does MS really shine in? Is hotmail any better than yahoo mail? Are either of them better than gmail?
I understand the basic principle that you're getting at in why the merger might seem to make some sense, but I don't think reality really backs it up. It's more likely to me that MS just doesn't know what the hell to do about Google, so Ballmer just decided to do something. He chose something big and bold to make it look like he has some sort of master plan, and he used the same logic that you're describing to try to convince investors that it'll work.
But when you really look at it closely, it's a silly plan. MS doesn't have any magical technology that they just can't get people to look at. Nor do they have any sort of awesome internet plan that just needs eyeballs to take off. Add in the reality that the process of merging two companies of that size would likely involve a couple years of disarray, and you're creating a great opportunity for Google to increase their lead even further.
The merger has been a terrible idea from the beginning. And I'll bet most MS employees frowned at the potential deal just as much as most yahoo employees, whether they feared for their jobs or not.
One time I threw a brick at a duck.
I have a long and proud history of Microsoft-bashing, but you've been modded +5 Insightful (as of when I write this) by alleging some really nasty things without a source. This is a very serious suggestion - you're basically saying that Bill Gates's foundation engages in tax fraud. Also - Bill Gates doesn't own Windows, Microsoft does. Maybe he gets a discount, but it certainly wouldn't be free as you suggest. Do you have a source or documentation for this?
"95% of all Slashdot