Carl Icahn Focuses On Yahoo!

This week's news about Yahoo has suddenly involved Carl Icahn. It's an almost surrealistic twist, involving the former corporate raider taking a 10MM share position in the company, and options for another 49MM.

As well as Microsoft's switchboard refusing to connect Icahn to Steve Ballmer, when the former called the latter recently. You can't write fiction this good.

The Bloomberg account reports,

"Icahn said in a letter to Yahoo's board yesterday that a combination with Microsoft ``is by far the most sensible path'' if the Internet company wants to take on Google Inc.

``The board of directors of Yahoo has acted irrationally and lost the faith of shareholders and Microsoft,'' said Icahn, 72. ``I sincerely hope you heed the wishes of your shareholders and move expeditiously to negotiate a merger with Microsoft, thereby making a proxy fight unnecessary.'' "

On would have to admit, looking at the nearby, Yahoo-sourced price chart of the past week for Yahoo, Microsoft and the S&P500, that Icahn's move has gained nearly-instant credibility.

Notice how Yahoo's price rocketed upward on the news of Icahn's focus on the company and its board?

Icahn further commented, again, according to Bloomberg,

"Accepting Microsoft's offer is a better option than going it alone, Icahn said. The board ``completely botched'' negotiations with Microsoft, prompting some Yahoo shareholders to ask Icahn to step in, he said."

Looks like investors agree, looking at this 6-month Yahoo-sourced chart of the same companies and information.

Yahoo's price shot up upon news of the Microsoft offer, then plunged when it was taken off the table recently. Major institutional shareholders were livid, and said so publicly.

The Bloomberg piece describes Icahn's slate of directors,

"Icahn's board nominees include Mark Cuban, owner of the Dallas Mavericks basketball team, and Frank Biondi Jr., former chief executive officer of Viacom Inc. Icahn said he has sought regulatory clearance to buy as much as $2.5 billion in Yahoo stock, about 6.7 percent of the company's outstanding shares as of April 30.

Icahn also nominated himself for Yahoo's board, along with Keith Meister, principal executive officer of Icahn Enterprises Inc. The other nominees are Lucian Bebchuk, a professor at Harvard Law School; John Chapple, the former CEO of Nextel Partners Inc.; Adam Dell, managing general partner of Impact Venture Partners; Edward Meyer, CEO of Ocean Road Advisors Inc.; Brian Posner, former CEO of ClearBridge Advisors LLC; and Robert Shaye, co-CEO of New Line Cinema. "

There have been a handful of articles discussing how Microsoft is still in the driver's seat, has the advantage, may still not want to risk the acquisition, etc. And there's probably some truth to all of that.

Carl Icahn can't unilaterally make this happen, as he has with some other recent deals, like BEA-Oracle, or the Blockbuster situation.

But it's fair to say that if there's even a scintilla of interest remaining on Microsoft's part, which would, admittedly, probably be bad for those shareholders, you can bet Icahn's going to revive that and get more for himself and his new fellow Yahoo shareholders.

More and more, Icahn is my kind of guy, in terms of having the money and tenacity to push for the shareholder returns he believes are reasonable, usually stopping short of Eddie Lampert's mistake of thinking he can actually run the company.

Should be an interesting time until the Yahoo annual meeting. With any luck, Yang, Yahoo's co-founder, will be kicked out, and Yahoo shareholders will recover some of the lost return for which the inept Yang is responsible.