Yahoo lets fox into hen house. Now what?

Most of the headlines rolling off the wire this morning testify to something like a tech version of "Peace in Our Time," now that Yahoo has given Carl Icahn a seat on the company's board of directors.

Sure.

Peace in our time?

Terms of the agreement involve Icahn getting a seat. Meanwhile, the board of directors will get expanded to 11, with Jonathan Miller awarded one and another chosen by Yahoo from the billionaire investor's proposed list.

Why should anyone believe that the fireworks are over? With Icahn getting to sit in with the rest of his new best buddies as a director, board dysfunction at Yahoo remains alive and well.

•  Jerry Yang better watch his back. Icahn, who has made it clear how little he thinks of Yang's stewardship, will continue to agitate for his ouster. Only this time, Icahn does it as a member of Yahoo's board.

Let's not forget the last few months' worth of PR statements out of the Icahn camp, dissing Yang as a geek goof who screwed up the company and then screwed up the negotiations with Microsoft.

For his part, Yang continues to (correctly) believe that Icahn couldn't find his way around a computer keyboard, if his life depended on it. Now these two are going to mug for the cameras? It doesn't get much better than this.

•  Speaking of the board, which rejected Microsoft's previous approaches: these folks remain in control. The canned quote attributed to Roy Bostock was a brilliant exercise in advanced fiction.

To wit: "We look forward to working productively with Carl and the new members of the board on continuing to improve the company's performance and enhancing stockholder value," Boystock stated.

Bostock must have gagged when his PR handler showed him the text, but this is show business. Let's see if he can resist pushing a cheese Danish into Icahn's face the first time they sit down for a board meeting together.

•  Unless Icahn drank the Yahoo Kool-Aid and now "bleeds purple," the guy has no intention of turning into a shrinking violet. Icahn remains the short-termer Yahoo's board previously said he was. The billionaire investor didn't get to be a billionaire investor by behaving like a shrinking violet. He wants a deal--any deal--that juices the stock price. And if the direction drifts, Icahn will get into the board's face big-time. Bet on it.

[sanenazok]

This is not a good analogy.

Just see where it takes you: if Yahoo is Neville Chamberlain making the "Peace FOR Our Time" speech, then who is Hitler? It could only be Icahn. I don't think you intended that!

[Renegade Knight]

The real intent it to point out that appeasment isn't going to work. If Yahoo's true course is what the existing board has seen fit to stick with then allowing the one person most vocal about what a bunch of morons that board is and who is on record saying they want to break Yahoo up into parts on board is nothing more than apeasment.

The real question is what gets sacraficed next? You can bet it's not outside of Yahoo.

[Penguinisto]

Keep your friends close, and your enemies closer.

The worst he can do now is cast a vote. The rest of the board now has control over him (it works both ways, y'know), where before, they didn't. He no longer has the freedom to run around bad-mouthing something that he is now a part of.

Funniest part of all, it seems like a rather Zen move on Yahoo's part... because while Icahn can agitate all he wants, but he no longer represents a threat. I'm willing to bet that MSFT won't be buying anything anytime soon (and if they do, it'll be a lot more expensive than they originally thought they'd have to pay).

/P

[rob908]

Charles Cooper certainly intended Icahn to adopt the dictator's role in this analogy. Peace in Our Time was an act of appeasement by Neville with a person who was aggressive and would prove to be aggressive in the future. The Peace wasn't worth the paper it was written on and Cooper is arguing that placing Icahn on the BoD cannot promise any long term peace between Yahoo and him.

[Renegade Knight]

Now we wait and see what a bull in a china shop really does. Icahn only has one strategy. The fast buck. That never pays off for the multitude of shareholders. Only the one poised to take advantage of it. Which is amzingly Icahn.

[john55440]

The arrangement should make for some "exciting" board meetings. (grin)

With the anti-MS crowd still in charge, it looks like any deal with them is dead.

[johnwbaxter--2008]

Goodbye, Yahoo. It's all over but the dismemberment.

[bicparker]

This might be the best strategy for Yahoo. Icahn now has to represent the shareholders and is part of the establishment. Any decisions the board makes, he will be accountable for since he is now part of the corporate governance mechanism. And you know this arrangement will get plenty of scrutiny.

It's one thing to wheel some deals from the outside (i.e, making agreements with Microsoft). But as a director, he's going to be under a different set of rules. This could limit his ability to make "back channel" deals with Microsoft directly, as he was doing in recent days

I am sure that Icahn has planned for this contingency, but it won't be a slam dunk, unless he has some magic bullet from Smurfland. It may end up being for him a way to cut short his losses on his Yahoo investments so far.

[redbarron2]

I remember Carl from my days with TWA, He went into that deal worth a couple of hundred million, raped the airline, and came out with 1.3 billion after he sold everything down to the excess toilet paper. I love his famous quote, "If I want a friend, I'll buy a dog." What a slime bucket. I hope and pray that Jerry has the support to put him in his place because his interests don't include shareholders other than him and his pals. I have the worthless TWA stock to prove that statement.

Redbarron2