For those wondering what activist investor Carl Icahn has to say about his announcement on Monday in running a slate of nine candidates to replace Yahoo's entire board or directors, here's his letter to Yahoo shareholders:
Dear fellow Yahoo shareholders:
We are significant shareholders of Yahoo, with an investment of approximately 4.98 percent of the company's outstanding common shares. We believe that NOW IS THE TIME TO ENTER INTO A SIGNIFICANT TRANSACTION WITH MICROSOFT.
To that end, we have nominated nine directors to replace Yahoo's current board. We urge you to read the enclosed proxy statement and vote the GOLD proxy card in favor of our nominees.
As you may have read in the news, during the past two weeks, I have spoken frequently with Steve Ballmer, CEO of Microsoft, about my desire to have Microsoft acquire Yahoo. In those conversations, Mr. Ballmer stated that he would be interested in discussing a major transaction with Yahoo, such as either a transaction to purchase the "Search" function, with large financial guarantees, or, in the alternative, purchasing the whole company.
However, Mr. Ballmer indicated that, due to his experiences with Yahoo during the past several months, he could not negotiate any transaction with the current board. Mr. Ballmer explained that if a transaction were to be consummated, Microsoft would be guaranteeing a great deal of capital at closing, but a transaction could take at least nine months, and perhaps longer, to close due to the necessity of obtaining the necessary regulatory clearances.
Mr. Ballmer stated that if the current board and management team of Yahoo were to mismanage the company during that period--a risk that Microsoft perceives to be quite high--Microsoft's money would be at risk, and a great deal could be lost.
However, Steve made it clear to me that if a new board consisting of my nominees were to be elected, Microsoft would be willing to enter into discussions regarding a transaction immediately. If and when elected, I strongly believe that in very short order, the new board would, subject to its fiduciary duties, be presenting to shareholders either a purchase offer for the whole company or a very attractive offer to purchase "Search" with large guarantees.
Our company is now moving toward a precipice. It is currently losing market share in its "Search" function, our current Board has failed to bring in a talented and experienced CEO to replace Jerry Yang and return Jerry to his role as chief Yahoo, and currently, it is witnessing a meaningful exodus of talent.
It is no secret that Google (which hired a great operator as CEO) continues to dramatically outperform Yahoo. According to publicly available information, Google's income from operations grew 59 percent per year over the last two years, while Yahoo's shrank 21 percent per year.
IT IS TIME FOR A CHANGE!
DURING THE NEXT FEW WEEKS, YOU WILL BE HEARING FROM US ABOUT HOW THESE CHANGES CAN BE EFFECTUATED AND A TRANSACTION STRUCTURED TO ENHANCE VALUE FOR ALL SHAREHOLDERS. STAY TUNED.
PLEASE VOTE THE GOLD PROXY CARD.
Your vote is important. Instructions for voting your Yahoo shares by Internet, telephone, or mail are enclosed, along with your GOLD proxy card or voting instruction form and postage-paid return envelope. Please act at your earliest convenience.
If you've already signed and returned Yahoo's WHITE proxy card, you can revoke that vote and cast a new vote by completing, signing, dating, and mailing the enclosed GOLD proxy card today.
If your shares of Yahoo Common Stock are held for you by a broker or bank, only your broker or banker can vote your shares--and only after receiving your specific instructions. In that case, you are asked to complete, sign, date, and mail the enclosed voting instruction form today. Please do so for each account you maintain.
If you need assistance in voting your shares, please call D.F. King & Co., which is assisting us, toll-free at 800-859-8509.
Thank you for your patience, cooperation, and support.
CARL C. ICAHN