The Yahoo Circus Continues

Today's breaking news regarding Yahoo is that investor Carl Icahn has settled for three board seats, including one for himself, rather than offer a complete hostile slate at next month's election.

I wrote this post last Tuesday, which included some thoughts about Icahn's activities at Yahoo. At the time, I, like most everyone else, expected a bare-knuckle brawl between Icahn and Yang-Bostock.

To be honest, I think it's a bad thing for Yahoo shareholders that Icahn felt it necessary to compromise- or capitulate- to Yahoo's management and board.

The nearby 5-day price chart for Yahoo and the S&P500 Index illustrates that, from a peak last week of about a +7% gain, Yahoo is now down to a flat performance. The S&P, for comparison, is still up a few percentage points.

From a longer perspective, this six-month chart of the same information shows Yahoo pretty much in steady decline since the initial Microsoft offer drove it up to a +40% return.

Since that time, in early February, the company's stock has declined to a return of only about +10%, a loss of 3/4 of the value pumped into it by Microsoft's original interest.

You can see the bump due to Icahn's jumping into the fray in the past month, but even that effect has now attenuated by about half its peak strength.

All of which suggests that investors aren't particularly happy about Yahoo's prospects now, either. Icahn may have had a long shot at replacing the firm's board and firing Bostock and Yang when he was running his own competing slate of directors.

Now, he has only 3 votes on an enlarged, 11-member board. And according to CNBC this morning, major institutional holder Bill Miller of Legg Mason supports the current Yahoo board.

Can Icahn make a difference anymore? Will his 3 votes actually convince 3 more on the firm's board? You can bet he won't be getting Bostock's or Yang's votes for anything material.

I wouldn't dispute Carl Icahn's instincts. But at this juncture, is he playing for a gain in his Yahoo position, or just a smaller loss?

Either way, as I have stated as far back as my initial post regarding the Microsoft bid for Yahoo, this deal won't be any good for Microsoft's shareholders. And Yang and Bostock already botched the best financial deal their shareholders were likely to see for a long, long time.

Carl Icahn is trying to salvage some value for kindred shareholders of Yahoo, but I'm not sure the situation is really going to work to his advantage in this case.

The next month should be very revealing, including the outcome of the annual meeting.