Carl Icahn Takes on Yahoo's Board 279
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 $19.18 on the day before the initial Microsoft offer. I and many of your shareholders strongly believe that a combination between Yahoo and Microsoft would form a dynamic company and more importantly would be a force strong enough to compete with Google on the Internet."
In other news.... (Score:3, Insightful)
Addendum: (Score:5, Insightful)
haha (Score:5, Insightful)
I can only imagine what would happen by taking yahoo's infrastructure off free bsd and putting it on windows.
Google might just be loving this.
Yahoo! (Score:5, Insightful)
I had given up hope that Microsoft would fire their legendary footgun at a Microwho? deal. I hope they blow all their available cash on this.
The synergy of this opportunity rivals a .com bubble for the ability to vanquish vast quantities of value.
Now I can look forward to reading about this in the news [google.com].
Re:Addendum: (Score:5, Insightful)
Re:In other news.... (Score:5, Insightful)
I don't think Icahn actually believes what he is claiming. He's just claiming it so that he can make even more boatloads of cash.
The Yahoo deal would have made a lot of people like Icahn richer. They take the profits, run and do they really care what happens to Yahoo? No they don't.
If you think the deal doesn't make sense, then the people who should worry should be the people owning Microsoft shares.
The founders of Yahoo may not like their baby being destroyed in the long run, but that's what happens when you take a company public - it's no longer 100% in your hands.
Re:In other news.... (Score:2, Insightful)
However, I do not agree that Icahn is an idiot. For him (and other investors) this is probably a lifetime opportunity to make money, for which they have invested in Yahoo. Their interest is in making money in the first place.
Brilliant idea. Why not we conspire against M$? Let them take over yahoo, and we all switch to some other portal, say xyz. Then M$ will spend millions to take over that. And again we switch. Again M$....again switch...and one day M$ gives up....:-D
Translation (Score:5, Insightful)
Though luck Icahn, betting on a single stock is stupid, go back to your books and study what "idiosyncratic risk" means.
Re:What offer? (Score:5, Insightful)
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.
Re:Translation (Score:4, Insightful)
Yahoo's board screwed up big time by trying to stay independent. Guess what? Google owns internet advertising and search. Neither Yahoo or Microsoft can really make much of a dent in it alone. Quite frankly, I'd much rather see a merger between them give Google some actual competition, because alone neither one is going anywhere. There is of course no guarantee that a combined company would actually be more competitive, but I find that more likely than Yahoo's fortunes suddenly doing a 180.
Re:It's not completely their fault (Score:4, Insightful)
Re:When I see something like this.. (Score:3, Insightful)
Re:It's not completely their fault (Score:1, Insightful)
Soooooo much better than a sense of humour.
Re:Addendum: (Score:1, Insightful)
Yahoo was... (Score:5, Insightful)
...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.)
Re:Translation (Score:3, Insightful)
Re:Translation (Score:5, Insightful)
Traditionally (Score:3, Insightful)
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.
Why is it I know a merger won't be successful... (Score:4, Insightful)
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.
Re:It's not completely their fault (Score:4, Insightful)
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
Silverlight (Score:2, Insightful)
Re:Icahn's a Pain in The Ass (Score:3, Insightful)
Re:Translation (Score:4, Insightful)
</rant>
Re:Money slaves.. (Score:3, Insightful)
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.
Re:Why is it I know a merger won't be successful.. (Score:5, Insightful)
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.
Re:It's not completely their fault (Score:5, Insightful)
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.
Re:Money slaves.. (Score:3, Insightful)
Re:Money slaves.. (Score:3, Insightful)
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.
Re:It's not completely their fault (Score:2, Insightful)
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).
Re:It's not completely their fault (Score:3, Insightful)
Osama Bin Laden gives money to orphans that doesn't make him a saint.
Giving money away doesn't undo what you have done.
Re:Icahn is right! (Score:2, Insightful)
Microsoft + Yahoo = .. (Score:3, Insightful)
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
Re:It's not completely their fault (Score:3, Insightful)
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?
Re:It's not completely their fault (Score:5, Insightful)
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.
Re:Addendum: (Score:2, Insightful)
What happened to long term investments? What happened to looking past next quarters' profits? Many people on Slashdot and other places rail against corporations, and yet ignore the root cause of these issues. Sure some corporations are doing nothing but grasping for every last dime. But many are also being pushed by their shareholders to ALWAYS increase profitability, dividends, and share price.
There was talk about Yahoo shareholders suing the board for blocking the merger. People that have no idea about the operation of the business, and with no other reason that profit, want to tell the board what to do. I will admit that Yahoo's board have financial incentives to not accept the merger. At the same time I think it is asinine that lawsuits are brought over strategic decisions.
Re:In other news.... (Score:2, Insightful)
Re:What is the "good technology" from Microsoft? (Score:1, Insightful)
I have no idea if Microsoft's search technology is any good, but that's beside the point, and it could in any case use Yahoo's search if it's better. The point from an economic perspective is turning web traffic into revenue, which Microsoft and Google can do well, but Yahoo can't.
As an aside, I'd wager most users searching for 'aardvark' are interested in the animal, not some Firefox add-on with a similar name, so the validity of the results is open to interpretation. Given that Firefox defaults to Google search, it's quite likely that there are a lot of Firefox users searching for this 'Aaardvark' add-on by entering 'aardvark' into Google, which would lead Google's algorithms to automatically 'correct' this apparent mistake. You can imagine some sort of conspiracy if you'd like, but I rather doubt the people writing Microsoft's search algorithms even know what this 'Aaardvark' add-on is, much less are plotting to hide it from users by not 'correcting' a possible mistake in a search query.
Re:Why is it I know a merger won't be successful.. (Score:3, Insightful)
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.
Re:Why is it I know a merger won't be successful.. (Score:1, Insightful)
As I've pointed out in another post, the technology question here refers to the advertising system, i.e. the software that turns web traffic into advertising revenue. Google figured out how to do this extremely well, and that's a major reason why it's where it is today. Yahoo never managed to do this very well, so never had as strong a financial position as Google, which is one of the reasons its competitive position has continued to weaken. It still gets a lot of traffic (I suppose the content is good), and this is overall, not just in search, but just can't convert that traffic into revenue at a level comparable with Google.
As for Microsoft, it has apparently managed to produce competitive (with Google) levels of revenue from its web traffic, but doesn't get enough web traffic to be a serious competitor. If it can increase its traffic through either a Yahoo acquisition (possible) or organic growth (doubtful), it will at least have a chance of competing with Google. Conversely, if Yahoo can develop an advertising system that works as well as Google's or Microsoft's, it has a chance as well. The problem is, the longer Yahoo continues with a sub-par advertising system, the weaker its competitive position vis-à-vis Google will become. To the extent that Microsoft has a platform that would solve Yahoo's problems now, a lot of institutional investors who hold both MSFT and YHOO think a merger will produce more value than the two firms can alone.
To reiterate, this has absolutely nothing to do with how good Microsoft's search engine's results are. I've no idea how they compare to Yahoo's and Google's but that doesn't really matter, because if Microsoft can connect its current advertising system to Yahoo's current traffic, it will produce a huge increase in revenue for Yahoo, without the need of any additional traffic. At the same time, that extra revenue will help to support development of content to potentially increase Yahoo's market share.
Finally, the idea that better technology will win on its merits isn't supported by economic theory when there are things like network effects and switching costs. These are arguably quite important in the search market, where a large amount of user data is necessary to accurately target advertising, and to optimise search results, and where there are undoubtedly some switching costs involved for firms that have come to rely on a particular supplier of a web advertising infrastructure.
Re:It's not completely their fault (Score:3, Insightful)
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?