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."

Comments

It's not completely their fault

[Mordok-DestroyerOfWo]

What are the odds that the FTC would actually allow a merger like this anyway? I mean the evil power of Microsoft coupled with both of Yahoo's users could mean serious trouble.

Re:It's not completely their fault

[Just Some Guy]

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".

He's called "evil" because he got his money by

• Monopoly abuse ("that's a nice little program you've got there, Stac...")
• Running competitors into the ground (no, that's not business as usual)
• Raw hypocrisy ("Open Source is Evil. Just don't look at ftp.exe.")
• Flat-out fraud ("sure, IBM, I have an OS I can sell you")

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.

Next up

[Mr Z]

Cue Shatner screaming "Icaaaaaaaaaaaaaaaaahn!"

Addendum:

[NeutronCowboy]

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.

Re:Addendum:

[Clueless Nick]

Investors like Icahn ironically don't give a fuck about ethics. That is why they flock to the likes of Microsoft.

haha

[mytrip]

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.

Re:What offer?

[st1d]

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.

Icahn's a Pain in The Ass

[ewhac]

Not that I would spend a great deal of effort defending Ed Zander, former CEO of Motorola, but when I was at Moto last year, Icahn seemed indignant that Motorola was sitting on some $12E+09 in cash, and was busy prancing around and bulk-mailing shareholders to vote him a seat on the board of directors, so that he could give the cash to Moto shareholders as a huge dividend (or something).

Even before Apple's iPhone came out and smacked Moto's RAZR out of the park, it was clear that Moto needed to be doing R&D for the next-gen handsets. Oh, and you might want to keep some cash around in case of a rainy day. Icahn got handed his hat. And Moto did a bunch of weird acquisitions.

These days, it's raining pretty hard at Moto. I'm sure that pile of cash is helping them through the lean times.

All of which is a roundabout way of saying: Carl Icahn is a vocal, over-exposed pain in the ass. Whenever he talks, put your hand over your wallet, and pay very careful attention to what he's doing with his own.

Schwab

Re:Why is it I know a merger won't be successful..

[Anonymous Coward]

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.