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."

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:

[Tuoqui]

Most of Yahoo's users run Windows anyways so they're basically the same users.

Re:It's not completely their fault

[martin-boundary]

Nuh, huh! I'm a Linux user, and for the record I have several throwaway fake email accounts on Yahoo, you insensitive clod!

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

[Futurepower(R)]

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.

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.

What is the "good technology" from Microsoft?

[Futurepower(R)]

"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..."

What is the "good technology" from Microsoft?

I just used Microsoft's Live.com to search for "aardvark". Interesting: Google returns a link to Firefox's Aaadvark add-on as the second entry. But Microsoft's live.com never lists the Firefox extension in the first 10 pages.

Can Microsoft be trusted not to be adversarial to customer interests in its search results? Apparently the answer is a big NO. Just that one random search convinced me to never use live.com.

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

[mysticgoat]

Parent is currently moderated +5 insightful.

+5 Funny would be more appropriate. It is a wonderful joke.

The joke is confusing Microsoft's fantastic marketing prowess, built upon freedom of encumbrance of any form of ethics, with good technology. Besides, everybody at this point knows that Microsoft's developers developers developers have all cashed in their stock options and gone to more interesting work at Google, IBM, and yea even unto Yahoo. The whole point of that Microsoft - Yahoo deal is that Ballmer misses having some developers around.

Re:

[cowscows]

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 so

Re:

[afidel]

meh, thowaway accounts are so painful to use. Google supports [e-mail] addressing so as long as someone doesn't have a broken email validation script it's easy to give sites an easily filtered address while only having to login once. Plus it gives me the advantage of having proof of who sold my address so I can never do business with them again and badmouth them online.

Re:

[dhavleak]

...I mean the evil power of Microsoft coupled with...

Objectivity. Gotta love it.

Re:It's not completely their fault

[ScottKin]

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

Re:It's not completely their fault

[peragrin]

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.

Re:

[schnell]

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.

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?

Re:

[killjoe]

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.

Re:

[pdusen]

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:

[mgblst]

He is not comparing them, he is pointing out how silly the statement that he is responding to actually is. He is saying that just because you do one good thing, does not forgive all the crap you have done in the past.

How fucking out of touch do you have to be with the english language/logic to jump to such a stupid conclusion.

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.

Re:

[dreamchaser]

None of that is evil. Deplorable, yes. Despicable, yes. Devoid of ethics, yes. Evil, no.

Re:It's not completely their fault

[Anonymous Coward]

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.

Given Microsoft's record on acquiring companies and launching new products Google must be dancing in the streets. They've been trying to kill Yahoo for years. Microsoft should do it in less than a year.

Re:

[totally bogus dude]

Possibly... unless they believe that a Microsoft takeover of Yahoo is inevitable, in which case they might simply be trying to make it as much of a pain for Microsoft as possible, just because they can. They might even be trying to drive Microsoft's bid even higher. After all, this offer is huge even by Microsoft's standards, and the higher Google (and others) can drive the bid before Yahoo accepts it, the more it'll hurt if it doesn't pan out for Microsoft.

Re:

[sumdumass]

We aren't really talking about windows users as much as we are talking about the conception of web services. MS already made deals with AOL and so on, if they take the Yahoo email clients, use their search tech to pump windows live up and or shit down any GPL or open source collaboration efforts, MS would have donw quire well for it's self.

Re:

[u38cg]

The current approach to monopolies in the US is not to assess whether a monopoly is being created as such. The thinking is that many monopolies, as defined by market share, still behave in a competitive manner. For example, the XM/Sirius merger gave the combined company a 100% share of the satellite radio market. It was not blocked because the merged company will still have to behave competitively, or they will lose out to other audio entertainment alternatives.

Similarly, if the barriers to entry in a m

Re:

[Anonymous Coward]

Similarly, if the barriers to entry in a market are low (by corporate standards) then a monopoly is likely to behave competitively. Since all you need to challenge Google is a server farm and some CS whizzes, Google will behave competitively even if it has a full 100% market share (which it doesn't, by any means). So there is effectively zero chance of this merger being blocked. And yes, just to clarify, I know the OP was joking...

Sorry, that's just flat out wrong. There are numerous ways in which Google co

Re:

[jesdynf]

(hence Google's frenetic attempts to block a Microsoft takeover of Yahoo)

Citation needed. I don't know that statement's true -- I don't recall any heavy activity on Google's part. Certainly nothing I'd describe as "frenetic".

I might've missed something, though.

Next up

[Mr Z]

Cue Shatner screaming "Icaaaaaaaaaaaaaaaaahn!"

In other news....

[NeutronCowboy]

... 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.

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:

[Anonymous Coward]

Welcome to Stock Market 101!

Who cares if the resulting Conglom-O tanks? It's all about the Benji's when you're talking that kind of scratch.

(Personal aside: It's sad when us poor saps see past the influx of cash and rationally evaluate the culture of both the companies and the market and realize that such a proposition would be a hands down mess, while the big bucks players wash their eyeballs of the whole situation).

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.

Re:

[Anonymous Coward]

So in the end Icahn is kinda smart if it takes you 6 minutes to figure out his plan.

Comment removed

[account_deleted]

Comment removed based on user account deletion

Re:In other news....

[TheLink]

You really think he's that stupid?

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:

[William Robinson]

Agreed every bit of it. And I have posted similar views earlier [slashdot.org] that M$ is gonna gain nothing except killing a good company, similar to Hotmail.

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 s

Re:

[jimicus]

Then M$ will spend millions to take over that. And again we switch. Again M$....again switch...and one day M$ gives up....:-D

There are only so many half-decent portals in the world. One day, MS would own 95% of the market.

Every /.'er using some other lesser-known portal wouldn't significantly change that number.

Re:

[guacamole]

Icahn is not an idiot. He and other investors don't give a damn to what happens to Microsoft or Yahoo afterwards. What they know is that if MS and Yahoo do merge, they get over $30 for each share that they bought for under $20. Instant profit!

Re:

[Spy der Mann]

And meanwhile, people get fired, services suck even more (inverse synergy!) and company owners abuse their customers. Way to go, Icahn! You've just become rich by making millions of people more miserable!

Re:

[Anonymous Coward]

You've just become rich by making millions of people more miserable!

That's the very backbone of capitalism friend. This isn't a touchy-feely world full of flowers and lollypops. When you are an investor it is your job to make money, period.

Re:In other news....

[Cornelius the Great]

You're exactly right. Icahn is nothing more than a corporate raider- he buys just enough shares of a company to get a controlling state so that he could suck the company dry. He pretty much single-handedly destroyed TWA (IIRC, the biggest airline in the 80s) in the late 80s/early 90s by selling off its most profitable ventures. By the time TWA could oust him, the damage had already be done, and they went bankrupt.

He recently tried to do the same thing to Motorola (disclaimer- I'm a current shareholder of MOT, and despise him) before the shareholder vote kept him out of the board- he still sued the company to force Motorola to sell its mobile business so he can cash out quickly.

Interestingly, he owns a hefty stake of Take Two. He may try the same shit if EA comes back with a bigger offer.

He has no other vision than seeing dollar signs as quick as possible (at any cost) and doesn't care any about the long-term health of the companies he plunders. Thousands have lost their jobs and even more small-time retail investors have been trampled on by him.

He's the worst kind of trader. In fact, I welcome short hedges more than seeing him scoop up shares of companies that I have positions in.

I doubt he cares

[thermian]

If Icahn can get the merger to go ahead, the value of his stock will skyrocket. At which point he will become even more filthy rich.

That's his only reason.

Anyone really thinking that yahoo plus Microsoft can really take on Google is fooling themselves. I don't think he's a fool.
Nor is he necessarily a nasty person. He is a capitalist, and very good at it.
Like it or not, this is exactly the sort of behavior that is viewed as being correct and successful in a capitalist society. Most of us little people only

Re:

[wellingj]

No. He is a moocher. The real Capitalist is the people at Yahoo because they know they can (and do) make a better products than Microsoft.

If I knew I made a better product that my competitor why the hell would I sell out to him?

Re:

[19thNervousBreakdown]

I think you're taking Ayn Rand a little too seriously.

Re:

[pla]

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.

This has nothing to do with "smart". Microsoft's offer would have seen Yahoo shareholders make 72% of their investment overnight. If they believed in the merger, they could hold on for an intereseting ride. If not, they could cash out and smile at having nearly doubled their money. I don't believe Icahn has actually claimed t

Re:

[bhtooefr]

I'm running Opera, and I don't believe I've ever seen the new form.

What's more disturbing is... my popup blocker occasionally catches surveys popping up on Slashdot. Yeah, seriously.

It's the DATA!

[martyb]

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.

I think you are on the right track, but I'd posit MS does not want just the USERS; they are as muc, if not more, interested in the DATA.

Targete

He doesn't believe it.

[weston]

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.

He doesn't believe any of that.

At least, I won't believe he believes it until he promises to buy and hold a large amount of stock in Microsoft for a decade or so, should they buy Yahoo.

What I think he believes is that he can either (a) be an arbitrageur on Yahoo for fun and 60-70% profit or (b) get Yahoo to pay him to go away.

Money slaves..

[Anonymous Coward]

"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"

Right..like they do care about that..they only want to cash out...money slaves.

Re:

[urcreepyneighbor]

Right..like they do care about that..they only want to cash out...money slaves.

wtf? It's a company and they are investors. We're talking business here, not Save the Hungry Homeless Spotted Whale of Peru.

Re:

[st1d]

Exactly, it's a business. The problem is, after the merger, either intentionally or through...market forces...it won't be.

Re:

[ynohoo]

we're talking social vermin here, the kind that would sell their grandmother.

Re:

[SerpentMage]

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.

Re:

[ubernostrum]

We're talking business here

Well, the original idea of owning shares in a company was that your share was bought at the cost of an investment into the company, and a portion of the company's profits would be paid to you as dividends to provide a return on your investment. This is, theoretically, the way it's still supposed to work.

What Icahn wants, however, is not to invest in a business and receive a return on that investment through dividends; instead, he wants to run a fly-by-night scheme where he

Re:

[jimicus]

And I can understand him, he's just trying any way possible to screw as much people as possible, wile walking away with money.

Nearly, but not quite.

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:

[Cal Paterson]

Heh, you act like the 80x return was 100% certain at the time. If. Only.

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:

[account_deleted]

Comment removed based on user account deletion

Yahoo!

[symbolset]

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].

I don't get it.

[Coppit]

I can see how Yahoo would help Microsoft compete with Google. But how does Microsoft help Yahoo?

Simple

[someone1234]

Icahn isn't Yahoo. He sees the coin, and only the coin. Who cares with Yahoo?

Re:I don't get it.

[rtb61]

The M$ buy of Yahoo had nothing to do with making M$ a better company, it was all about Ballmer's survivability after his windows and office blunders as well as his bombastic boats about beating google. This was a look at the other hand buy, a whole lot of flash and noise about buying Yahoo to obscure the failures.

Simply put, in a few months the M$=B$ PR machine would rewrite history, add Yahoo market share and revenue to MSN's lack of market share and revenue and then claim all those gains for MSN as a result of Ballmer's skill, rather than simply buying those numbers in at a loss.

Competition in the search engine market

[guacamole]

How come FTC hasn't looked into the antitrust implications of this merger? If Microsoft and Yahoo are allowed to merge, the US search engine market will be split between only two companies, a dangerous situation. Moreover, one of them, Microsoft, had been already convicted of possessing a monopoly in the desktop OS market and using its market power in operating systems to tie its secondary products with the OS, thus gaining an unfair advantage over other software and service vendors. Even if the FTC allowed Microsoft and Yahoo to merge, they should seriously consider forcing Microsoft to give the consumer a choice of creating a gmail account and say getting google bar instead of automatically getting the standard MSN setup.

the Nixon Defence ..

[rs232]

"How come FTC hasn't looked into the antitrust implications of this merger?"

Because when MicroHOO does it that means that it is not illegal. And MS didn't make all those donations on capitol hill for nothing, DOH !!!

Re:

[pionzypher]

Surely you jest.

This page [searchengineland.com] lists some dated stats which may or may not have changed significantly in the last ten months. Google had 54%, Yahoo had 22.9%, MSN/Live had 8.8% and Ask.com had 3.6%. That would effectively make two companies the ones serving up 85.7% of search results. Note that there's a reason Excite and Altavista are ignored.. they suck. I just ran a search on Excite for the term 'arduino' and every other link was a sponsored link. 39 results total including sponsored links. None of t

Re:

[RLiegh]

I didn't know that there were only two search engines in the U.S. market...

That's because you didn't [ask.com]

Translation

[WaZiX]

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.

Translation: "I got burned buying Yahoo! shares betting MS would raise its offer, please resume talks so the share go up again and I can win my money back!"

Though luck Icahn, betting on a single stock is stupid, go back to your books and study what "idiosyncratic risk" means.

Re:Translation

[Grave]

Tough luck? As a major shareholder, he has voting rights. And he's using those rights to challenge Yahoo's board over their failure to seriously consider the offer. Anyone who believes that letting Microsoft walk away was going to increase shareholder value is an idiot. The $33/share offer was probably the highest value any Yahoo shareholder will ever again see for their stock.

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:Translation

[WaZiX]

Tough luck? As a major shareholder, he has voting rights. And he's using those rights to challenge Yahoo's board over their failure to seriously consider the offer. Anyone who believes that letting Microsoft walk away was going to increase shareholder value is an idiot. The $33/share offer was probably the highest value any Yahoo shareholder will ever again see for their stock.

Well first of all, the job of the yahoo! board is to maximize shareholder value for _all_ shareholders, not just Icahn. Second, since when has the conjunction of two failed strategies ever worked out? Both Yahoo! and MS have failed to win marketshare over Google and somehow the combination of both will work? I might be too old and all, but a clear trend on the web is that small start-ups are the ones that usually succeed, not huge conglomerates, so keeping Yahoo! at a decent size might give them a bigger chance to adopt to what the market wants. Microsoft has a pretty bad track record (certainly recently) at meeting consumer demand, just look at Vista, the Zune, the whole range of Windows Live! services, etc... Why would Yahoo! want to sell-out to a company that obviously has a hard time meeting consumer demands in a market that needs exactly that?

Re:

[Xuranova]

You are right that Yahoo has a responsiblity to maximize shareholder wealth. My question to you and Icahns to the board: Does Yahoo have a plan to increase their share price by 73% in the forseeable future? We'll say the next 5 years, this isn't the far east, we're relatively impatient. If not, they failed at their responsiblity to maximize shareholder wealth.

Re:Translation

[dkf]

Does Yahoo have a plan to increase their share price by 73% in the [next 5 years]? If not, [the Yahoo board] failed at their responsiblity to maximize shareholder wealth.

I think if you look more carefully, the board has a responsibility to increase shareholder wealth by pursuing a line of business. If you think they shouldn't be in that business at all, you're a damn fool for investing in them. (Now, if they changed to a new line of business in backing monoline insurers or something else that's now known to be stupidly risky right now, you might have a reasonable claim on the fiduciary responsibility front.) The board doesn't have a responsibility to ensure that you personally maximize your own profit on a short-term investment; people who think they do are Wall Street scumbag leeches of the worst sort as they don't know the real difference between money and wealth.

</rant>

Traditionally

[Anonymous Coward]

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 h

Re:

[justinlee37]

You're the stupid one; YHOO has 1.4 billion shares outstanding. Carl Icahn has a four percent stake [theregister.co.uk] in Yahoo -- that's 56 million shares, in case you didn't want to do the math (I did). Today, Yahoo! closed at 27.75/share. This means that Icahn's investment is worth 1.554 billion. Now, Carl Icahn [wikipedia.org] is purported to have $14 billion in assets. This implies that 11.1% of his wealth is currently invested in Yahoo, and that's assuming that the figure on Wikipedia hasn't changed since it was uploaded -- it may have

Re:

[WaZiX]

You're the stupid one

Am I? He has 1.5 billion invested in Yahoo, yet he buys _more_ stock this week with a few buddies and asks the board to reconsider a merger? He's trying to force a Yahoo! sell-out, this has nothing to do with long term shareholder value or what is best for Yahoo! as a company, this is an abuse of corporate governance to make short term profit. This is nothing more then an LBO-resale like strategy.

Re:

[justinlee37]

Being a slick crook and being stupid are two different things. Say what you will about LBO's, but those people made fortunes with them.

Re:

[WaZiX]

Except this isn't an LBO, this is a gamble on the MS bid to be reconsidered... He got burned by idiosyncratic risk and wants to force his way out of it...

Re:

[justinlee37]

The shares he already bought are a sunk cost and there's no reason not to push ahead now (well, besides MSFT calling off the deal, which does make this all kinda silly). But hell, he's smart enough to know that if he bought up a hefty bunch of stock and made some nice public moves like he's doing, that would increase investor confidence enough for him to dump his shares at a higher price (even if no deal went through). Of course, that would undermine confidence in his future moves ... but when you have $14

What offer?

[palemantle]

What offer is this idiot talking about?
From TFA: "I and many of your shareholders strongly believe that a combination between Yahoo and Microsoft would form a dynamic company"

Microsoft, on the other hand, says it is no longer interested http://www.microsoft.com/presspass/press/2008/may08/05-03letter.mspx [microsoft.com]

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.

Re:

[Eighty7]

Even without an offer on the table, there's other reasons a major shareholder might want to get rid of the board. He might feel he needs to punish them for not doing what he wanted. Or even just to show that he can punish them & maintain credibility.

When I see something like this..

[wanax]

I've followed the /. headlines over this lack of a deal, and have been generally surprised by the neoliberals ordaining that the yahoo board had a duty to sell the company for short-term advantage. Despite the fact that under any decent discount rate, the whole proposal represented little more than a bet.

Even if regulated accounting doesn't float your boat, the ideas of Fischer Black (eg. http://www.amazon.com/Fischer-Black-Revolutionary-Idea-Finance/dp/0471457329/ref=sr_11_1?ie=UTF8&qid=1210920867&sr=11-1 [amazon.com]
) can't be ignored. Under that light, the entire deal seems to be more involved in noise trading than any solid economic expansion.

Re:

[justinlee37]

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.

Yahoo was...

[Ihmhi]

...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:

[freedom_india]

That maybe the case, but google buying yahoo would be worse for both.
Whether you add one drop of poison in a glass of milk or add one drop of milk in a glass of poison means the same.
Google + yahoo= instant death to both.
First of all how do you evaluate Yahoo and Microsoft (and Google) financially?
Balance sheets? P&L?
They were tools designed by Leonardo DaVinci's Accountant to help evaluate DaVinci's trade!
Secondly Balance Sheet was used by the Great Rails during the Great Expansion West to convince inv

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:

[tinkertim]

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

OK, so if you resist a hostile takeover by Microsoft, they send an old billionaire to come fart in your office?

Why, oh why couldn't they have gone after Enron? That combination of gases could have fueled an entire city for a decade.

Re:

[u38cg]

R&D doesn't cost $12 billion. A company is run for its shareholders. If that company is sitting on a pile of cash and doesn't know what to do with it, it *has* to hand it back to the owners of the business - ie, the shareholders. Simply squirelling it in the bank for a hypothetical rainy day is wasteful.

Re:

[z4ce]

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 sha

Temporary ownership

[rastoboy29]

When is free trade too free? The summary itself says that Icahn bought a bunch of shares in the last week--after Yahoo rejected MS's bid. How deep is his stake, really, when he's a speculator and not a true investor?

I don't know...just doesn't seem completely right to me. I know he's acted well within his rights. But I also know he's looking for a short term gain in turning these shares around, as opposed to actually helping Yahoo the company survive. Which it does not if MS in

Silverlight

[ozonearchitect]

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/ [adobe.com] 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.

Yahoo Chairman replies

[kernowyon]

The BBC has a reply to Mr Icahn from Roy Bostock today - http://news.bbc.co.uk/2/hi/technology/7404012.stm [bbc.co.uk]
in which Mr Bostock states that it is not in the shareholders interests to allow Icahn and his "handpicked nominees" to take over.
This is going to get very interesting!

Icahn is right!

[voss]

Yahoo is not the #1 search engine and even if microsoft took it over they still wouldnt be.

Whatever you think of microsoft as a company doesnt matter.

  The yahoo board is supposed to represent its shareholders, if I hold stock in a company and someone offers 72% more than the shares are worth, and the company wont even let me consider the offer id be pissed too!

Icahn doesnt have a duty to yahoo, yahoo has a duty to its shareholder to act in their best interests
even if it means selling out to microsoft and losing their cushy jobs.

Sometimes not everything is black and white.

Re:

[monkeySauce]

This is Slashdot, not Marketwatch.

Down with the man!

Re:

[the grace of R'hllor]

Long-term viability of Yahoo is endangered by a deal with Microsoft. Hell, it's endangered without it, but if there is a merger, it'll be the death blow. You know it, I know it, Yahoo knows it. So what I'd like to know is, where is Yahoo's responsibility: Providing short-term monetary gains, regardless of long term results? Or are they allowed to take the long view, and take the *good* decision?

Re:

[duplicate-nickname]

What do you mean Yahoo would be endangered? It wouldn't exist anymore. "Yahoo" would just become a Microsoft brand, probably pulling in the Live/MSN products under it.

This would have been a better deal for Yahoo than Microsoft. Yahoo shareholders would have gotten an "out" from that struggling company, but Microsoft would have been stuck with yet another Internet property that can't compete with Google's advertising business.

If I were a Yahoo shareholder, I would be pissed at the board rejecting Microsof

Don't do evil

[threaded]

A wicked thought passed through my mind: could some major Google shareholders have put him up to this? Google could be the only winner in this, shirley?

you're projecting paranoia again Bill .. :)

[rs232]

"A wicked thought passed through my mind: could some major Google shareholders have put him up to this? Google could be the only winner in this, shirley?"

No Bill, that's what you would have done if the situations were reversed .. :)

Illogical conclusion

[monkeySauce]

So according to this guy:

Microsoft + Yahoo = "Dynamic" ?

I think he's way off base. If Microsoft is going to be a Dynamic Duo with anyone, it would be more likely some organization that thinks like them and can compliment their business practices, such as:

Microsoft + Halliburton
Microsoft + SCO (oops, already happened)
Microsoft + Phillip Morris
Microsoft + the Mafia
Microsoft + Dow Chemical
Microsoft + Exxon Mobile ...

Re:

[analog_line]

I dunno, have you ever seen two cats fighting? That's pretty dynamic right there. Productive, too. Fur flying all over the place.

Microsoft + Yahoo = ..

[rs232]

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

Double Proxy

[Joebert]

Microsoft initiates a proxy battle, everyone cries foul about monopoly/etc.
Ichan initiates a proxy battle, everyone grabs popcorn.

Microsoft doesn't need to be picking fights with all the litigation they've been through in recent years. They were smart to back down & wait things out.

I'm bailing out

[SL Baur]

How do I get archived email off of yahoo?

To his credit, the dude's got balls!

[zubikov]

I can see how Icahn angers just about everyone on this forum, but look at it from another angle. He buys 59M shares, walks right up to the chief and says fuck you, pay me. This is a textbook example of greenmail, and he will probably force a nasty proxy battle which will result in him destroying Yahoo by giving it to Microsoft. That's what happens when you take a company public, so everyone including Yang should stop crying. He knew exactly what he was getting into.