Featured Article: ForeSee Survey: Apple, Newegg and H-P Lead in Online Satisfaction
Icahn May Push for MS/Yahoo Merger
by , 9:35 AM EDT, May 14th, 2008
Microsoft walked away from its Yahoo buyout offer, but billionaire Carl Icahn may not be ready to give up so easily. Sources close to Mr. Icahn claim he has been buying up Yahoo shares in preparation of pushing a proxy take over so that Microsoft can try its buy out again, according to CNBC.
Mr. Icahn may have acquired some 50 million yahoo shares already, and could use that to leverage a move to replace three or four Yahoo board members with pro-Microsoft alternatives. Microsoft, however, has not expressed any interest so far in supporting Mr. Icahn's alleged scheme.
Mircosoft presented Yahoo with a US$44.6 billion unsolicited buyout offer in early February, but the Internet search and advertising company shot the offer down claiming it was undervalued. The Redmond-based Windows Vista maker eventually pressured Yahoo to the negotiating table, but withdrew its offer in early May.
Microsoft CEO Steve Ballmer commented at the time "After careful consideration, we believe the economics demanded by Yahoo do not make sense for us, and it is in the best interests of Microsoft stockholders, employees and other stakeholders to withdraw our proposal."
Should Mr. Icahn plan to pursue his own hostile take over setup, he'll have to act soon because Thursday marks the deadline for presenting his proxy board roster.
Observer Comments
From Wikipedia
QuoteIcahn made extensive use of financier Michael Milken's junk bonds. After the junk bond and overall market bust in the early 1990s, Icahn played a lower-profile role in the business world, preferring to be less public in his dealings.
Icahn developed a reputation as a ruthless corporate raider after his hostile takeover of TWA in 1985.[1] The result of that takeover was Icahn systematically stripping TWA of its assets and selling them off.[2]
IMO Icahn doesn't give a d*** about what is good for Yahoo, its customers, or other shareholders. He just wants his money.
Wed May 14, 2008 12:16 pm Subject: If there were no crows...
...our streets would be littered with dead possums. Think about it. Icahn is the bliunt force instrument of Schumpeter's creative destruction, a very necessary process in capitalism. Given that Icahn has fired a shot across Yahoo!'s bow, maybe Jerry Yang should be thinking about how to ensure that his company is at least in the ballpark comparing its worth to even semi-liquid assets. Or maybe he should have thought about that when Steve Ballmer bet that he knew there was an issue there.
The story of economics and the economics way of thinking are as important to understanding and interacting with the world today as being able to add and subtract were important to balancing your checkbook 20 years ago. The barrier to wider understanding is that the discipline cloaks itself in pseduomathematical formalism. But the concepts, elucidated by Adam Smith, David Ricardo, Joseph Schumpeter, Milton Friedman and many other notables are accessible and applicable by non practitioners. In my book, avoidance of the economic way of thinking would be willful ignorance if it weren't for the way the discipline isolates itself.
But that aside... Carl Icahn is just very good at what he does, an extremely efficient player in these value games. The irony of Yahoo! is that 8 years ago, it was the poster company for the Internet bubble, and now it is so undervalued in terms of its obvious assets that it rejected an uninvited buyout from Microsoft and now finds itself in the sights of a prominent corporate raider.
Yahoo!'s defenders are nostalgic for what's now. Seriously, it's the only defense of the company available! Employees and customers might be the most affected by any acquisition. We all feel compassion for them. But what of investors whose assets are undervalued by misuse and/or ineffective management? These investors might be your parents or grandparents or yourselves that have retirement money in pension funds! That's who Steve Ballmer and Carl Icahn represent. If Microsoft or Carl Icahn don't take care of this in the short term, the market will continue to punish Yahoo! until it takes care of it in the long term and losses are extended and spread out. Or maybe Yahoo! gets bailed out by a savior company which it will become a drag on. Or worst of all, maybe the government comes in like they did with Chrysler in the early 1980s, wasting billions of dollars supporting a company destined for perpetual irrelevance.
It's all pretty sad, but let's not get high and mighty about anyone's motives in this whole equation. They all have a role to play and the underlying problem is that Yahoo! is seriously underperforming for the assets it has available.
I've been surprised to find how much similarity there is between the economic world and the natural. Successful companies (species), new ecosystems that appear-evolve-and then mature, companies that run for a while and then die out, scavengers that help clean up the mess and recycle the good bits into the environment, parasites that drain companies of vital nutrients (money) etc. etc. Personally though, I'd rather piece together the environmental interactions during the Ordovician, or Triassic. To each his own.
There is likely a lot of truth in what you say about 'pseduomathematical formalism'. I might have called it 'economic technobabble'. It's unfortunate that most people's exposure to economics is in the form of talking heads on TV.
Recent Headlines - Updated Thursday, May 15th, 2008
- Thu., 4:50 PM
- OWC Adds Sizes, Reduces Prices for Portable Hard Drive Line
- 4:20 PM
- Battlestations: Midway Set for June 27 Release
- 3:40 PM
- ForeSee Survey: Apple, Newegg and H-P Lead in Online Satisfaction
- 1:30 PM
- Apple's Bolyston Street Store Sign of Things to Come
- 1:05 PM
- TMO Appearances - TMO's Dave Hamilton, John F. Braun at NCMUG
- 12:30 PM
- Mozilla Releases Thunderbird 3 Alpha
- 12:10 PM
- Marware Introduces C.E.O. Envi for MacBook Air
- 11:25 AM
- Icahn Ready to Dump Yahoo Board
- 10:40 AM
- Hot Forum Topic - Time Capsule: Reader Experiences
- 10:15 AM
- Take Control Unveils New Apple Mail Books
- 9:50 AM
- iPodObserver - Intel Debunks iPhone Atom Rumors
- 9:20 AM
- iPodObserver - AT&T: One iPhone Per Customer
- 8:50 AM
- Skype 2.7 Hotfix Improves Firewall, Router Support
- 8:05 AM
- Cyberduck 3 Adds WebDAV, Amazon S3 Support
- 5:00 AM
- Adobe Intros Flash Player 10 Beta
- 3:40 AM
- User Friendly Blog by Ted Landau - The iPhone needs a faster better Safari
The Mac Observer Reader Specials
- Download Typestyler, still the Ultimate Styling Tool for Internet, Print and Video Graphics. Works great in Classic with a Native OS X Version on the way. Free Tryout: www.typestyler.com
- Other World Computing: Go Longer Between Charges with a NewerTech NuPower Batteries! Not just another battery, NuPower available for PowerBook and iBook models, is built in the USA to offer the longest Run Time + the longest useful LifeTime too! In Stock at OWC from $99.95
- MacPro Memory 667Mhz With Apple Spec Heat Sink 2GB Kit $ 90 / 4GB Kit $140 / 8GB Kit $278 Click to Maximize your Macs...
- Mac observers can now play Party Poker for Mac as well as Mac casino games by going to MacPokerOnline.com.
For the latest Apple products use Ciao a comparison website to find laptops like MacBook Air. Then find the best prices on MP3 players and use our comparison tool to evaluate cell phones.
- Laptop Hardware Provided by TechRestore - Overnight Mac & iPod Repairs.