It wasn't the world's worst-kept secret but it wins honorable mention.
As expected, Yahoo announced Thursday afternoon that it had appointed Frank J. Biondi Jr. and John H. Chapple to its board of directors.
This seemingly puts a final coda on the months-long Carl Icahn soap opera, which featured the billionaire investor's sundry attempts to take control -- or force a sale -- of the company. In the end, Icahn settled for a board seat for himself as well as Yahoo expanding the size of the board to accommodate two more directors. Yahoo agreed to select the candidates from a pool that included Icahn's former slate of dissident directors.
In a statement, CEO Jerry Yang had this to say:
I look forward to working together with Frank, John, and the rest of our board to continue the progress we've made on our strategy to be the starting point for the most Internet users, a must buy for the most advertisers, and to develop the world's most open platforms.
Biondi is a senior managing director of investment adviser WaterView Advisors, former chairman and chief executive of Universal Studios, and former head of Viacom. Chapple is president of Hawkeye Investments in Redmond, Wash., and former CEO of Nextel Partners.
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.
This wasn't the sort of reaction Carl Icahn was expecting from his former buddies on Wall Street.
Legg Mason Capital Management, which controls about 4.4 percent of outstanding Yahoo stock, plans to back management at the company's shareholders meeting next month. Could it be that Legg Mason thinks he's as clueless as Yahoo claims he is when it comes to managing a complex technology company?
Bill Miller, chairman and chief investment officer of Legg Mason, said Friday in a statement that Legg Mason would prefer the feuding sides reach a settlement and "end this disruptive proxy contest."
But so much blood has been spilled that no one involved believes that scenario is likely. As a result, Miller and his company are giving the nod to Yahoo CEO Jerry Yang.
"We believe the current board acted with care and diligence when evaluating Microsoft's offers," Miller said. "We believe the board is independent and focused on value creation for long-term shareholders."
Win some, lose some. But this is a big loss on Icahn's home turf.
The guy may not know how to navigate around a personal computer, but he knows Wall Street like the back of his hand. So if Icahn, one of the guys who wrote the book on greenmail, couldn't win over one of his own--Et tu, Brute?--you have to wonder about his chances at the showdown with existing management on August 1.
Another day, another filing. By now, you'd think Yahoo had said all that it could say about its increasingly rancorous disagreement with Carl Icahn over the future of the company.
Not by a long shot.
Earlier today, the company issued an in-your-face challenge to Carl Icahn in a letter to shareholders, which also singled out Microsoft for poor judgment. But that didn't exhaust Yahoo's surprising gift for gab.
In the run-up to its highly-anticipated shareholders meeting on August 1, Yahoo filed a document with the Securities & Exchange Commission after the close of trading.
The document rehashes familiar arguments Yahoo execs have made on other occasions--that it boasts a seasoned management and board of directors, that the company has pursued a "thorough process to review strategic alternatives" (unlike you know who), and that the search arrangement signed with Google does more for stockholder value than the competing offer from Microsoft. And, of course, the filing includes analysis and commentary about the Icahn proposal, which it finds wanting.
Yahoo's filing does include a further look at Microsoft's latest proposal to Yahoo. Microsoft says that search deal includes revenue guarantees of $19.5 billion to $26.5 billion over 10 years. For the first five years, Microsoft guarantees $2.3 billion. After that, both companies have an option to renew the agreement, but at very different prices. If Microsoft unilaterally renews, it has to pay Yahoo $3 billion, while Microsoft's guarantee drops to $1.6 billion if Yahoo alone wants to renew.
Microsoft calls the proposal "compelling" to quote its CFO, Chris Liddell. Yahoo obviously had a very different take. And so on.
OK, we get it, guys--though I doubt it's the last we're going to hear on this topic before Yahoo's Day of Reckoning.
While the food fight between Yahoo and Carl Icahn escalates--and while I'm at it, don't forget Microsoft--both the House and Senate Judiciary committees are getting ready to hold hearings on the proposed Yahoo-Google tie-up. In advance of this primo photo op for the hired help, I had a chance to review the prepared testimony of David Drummond, Google's chief legal officer. Give the guy credit for putting together a crisp presentation. Among the highlights:
• If Uncle Sam green-lights this deal, Google won't wind up taking nearly total control of the search market.
• The deal is good for users and advertisers.
• Google is not going to wind up with more search traffic.
It's hard to say all that and keep a straight face, but Drummond's a good lawyer and I'm sure he'll give a convincing presentation. Drummond knows he better bring his A game because he's going up against far sharper minds than the grandstanders who turned the 2006 China-Internet hearings into a veritable circus.
Drummond's central argument will be that Yahoo remains a viable rival. That's where the debate will ensue. How is more concentration of power--i.e. even greater dependence on a single company--supposed to benefit online advertisers? Just to show humor is in no short supply, Microsoft will play that card for all its worth. The biggest software monopoly in history can rightly argue that Google accounts for about three-fourths of search advertising revenue (and roughly the same number of search queries) in the world. Add Yahoo's roughly 20 percent and that translates into POWER. Microsoft knows something about that. But I digress.
Microsoft should also hammer hard on another point: the Yahoo-Google arrangement is structured so that Yahoo earns more money when Google earns more money. Because it will share in Google's revenue, what's Yahoo's incentive for competing against its partner? Google has a briefcase full of counterarguments to offer, but it's going to be a tough sell. Especially considering the change in the political constellation of forces. After nearly eight years letting corporate America have its way, Uncle Sam has piled up a fairly lousy economic track record. And now Congress is being asked to remain mum on Google-Yahoo? Don't bet on it.
Warren Cowan, chief executive of the U.K.-based search engine company Greenlight, spammed reporters Monday with his thoughts. But consider what he has to say:
"As far as the advertisers go, I don't see this as a good thing for the online advertising industry. We speak to major advertisers every day, and what they want is better returns, more distribution and less dependency on one provider. Likewise search agencies want to be able to diversify their clients spends and reduce risk too, and this deal doesn't deliver these to anybody. Whilst a Microsoft/Yahoo deal would have reduced the number of people in the market, it would have done much more to balance the options open to advertisers."
Should be fun tomorrow.
CNET News' Declan McCullagh explains why a federal judge's decision may have potentially major implications for Internet auction sites. Even though the court was sympathetic to the problems Tiffany faces with counterfeit products on auction sites, the ruling found that trademark law can't be used to compel eBay to police listings.
Carl Icahn and Yahoo are stepping up their confrontation. After a SEC filing by Icahn and a warning from CEO Jerry Yang to his employees, the old Godfather phrase about "going to the mattresses" seems more than apt. CNET News' Dawn Kawamoto has the latest recap.
Plus, what brings together the geeks from Google and the British rock band Radiohead? Why, technology, of course. Read on--and then take a listen.
Listen now: Download today's podcast
Today's stories:
Icahn to run slate of nine for Yahoo board
eBay wins counterfeit-sales lawsuit brought by Tiffany
Microsoft opens up E3 with loud, energetic press conference
The man who changed Internet security
Glam Media jumps into e-newsletter market
Tesla Roadsters now rolling off production line
Google: Hey, look, Radiohead's new video is cool and has lasers
The headlines this evening report yet another Yahoo rejection of an offer to sell its search business to Microsoft. But the wording of the latest chapter in the epistolary negotiations between these companies drops intriguing hints about a possible denouement.
On the surface, this latest rebuff sounds like a recapitulation of Yahoo's previous rejections. But that's painting with too broad a brush. Consider the following:
Yahoo's Board points out that a transaction to acquire the whole company would be much more straightforward and involve far less risk than the new proposal or any similar alternative. The Board believes a whole company transaction could be negotiated and executed prior to August 1st. In rejecting the Microsoft/Icahn proposal, Yahoo not only repeated its offer to sell the entire Company to Microsoft for at least $33 per share, but also offered to negotiate an improved search only transaction. Microsoft rejected both offers.
In other words, just figure out a way to come back with a serious proposal that doesn't have Carl Icahn's fingerprints and maybe we can finally do a deal. Of course, that's easier said than done. The public statement put out late this evening portrayed Icahn as a mischief maker, describing his alliance with Microsoft as "odd and opportunistic."
After negotiating among themselves without the involvement of Yahoo, Carl Icahn and Microsoft presented us with a 'take it or leave it' proposal under which we would be required to restructure the Company, hand over to Microsoft Yahoo's valuable search business and to Carl Icahn the rest of the Company, giving us less than 24 hours to respond. It is ludicrous to think that our Board could accept such a proposal. While this type of erratic and unpredictable behavior is consistent with what we have come to expect from Microsoft, we will not be bludgeoned into a transaction that is not in the best interests of our stockholders.
Still, that's a long way from where the Yahoo-Microsoft negotiations were last month after the announcement of the Google search deal. A lot has been made about founders Jerry Yang and David Filo supposedly being hell-bent on keeping control without sufficient regard for shareholders. Whether there was any truth in that depiction no longer matters. Yahoo's management now can envision a future with Microsoft.
The wild card here is Icahn. Yahoo's board has no intention of committing ritual hara-kiri, let alone hand over the company to someone they see as a billionaire nudnik. Chairman Roy Bostock and his colleagues don't believe Icahn has a clue how to run a complicated technology company. (You know what? Icahn probably agrees. Anyway, he would let his proposed slate of directors figure that one out.) Yahoo's right about this much: Any partial sale to Microsoft would take several months--perhaps up to a year--to allow regulators to pore over the fine print. Is Icahn's proposed team good enough to navigate through the shoals until all those details got sorted out? From Yahoo's perspective, it's just a lot cleaner to sell the entire kit and caboodle.
At a higher price, naturally.
The latest "no" is more of a "yes," but does that suggest a successful outcome is in the cards? Hardly. If these two sides had been in charge of the Normandy invasion, they'd be speaking German in France today. Maybe what's needed now is a Henry Kissinger-like mediator to help them do what they both seem to want to do next.
Stepping up his one-man PR offensive, activist investor Carl Icahn described as "completely disingenuous" Yahoo's contention that disagreements over price torpedoed acquisition talks with Microsoft.
Resistance is futile: My kung fu is stronger than your kung fu
Icahn, a veteran negotiator, broke an uncharacteristically long silence by talking to the media this week to rally anti-Yahoo opinion. Yesterday it was The Wall Street Journal, today it was CNBC.
"Sue Decker says today 'We're doing everything we can but the price isn't high enough.' It's not high enough because of (a proposed severance) package," Icahn said in an interview on the CNBC program, Fast Company. "And it's a bit worse than you're alluding to because one of the things that Microsoft, I would imagine, needs here is the workforce. And how do you then go in and tell them (Microsoft's) paying $45 billion but we're incentivizing this workforce that you want to leave? I mean, it's sort of--it's sort of incomprehensible what they're doing here."
The proposed Yahoo severance plan, which comes out to roughly $1.60 a share, was seized upon by critics who said it presented an obstacle to any potential deal with Microsoft. In a letter he sent today to Yahoo Chairman Roy Bostock, Icahn demanded that the board rescind the severance plan, which he described as "the largest impediment to a Microsoft deal." Icahn said that decision would free up approximately $2.4 billion and possibly even more that could be added to the bid.
In the meantime, Icahn used his CNBC appearance to deride Yahoo's management as lacking accountability. On Monday, he again urged the dismissal of Yang, who Icahn said stood in the way of a fruitful negotiation with Microsoft. In mid-May, he filed a proxy slate to unseat Yahoo's board.
"I tell you I've rarely seen (a management team) where the company has gone to such lengths to entrench themselves and it's a sad commentary."
At the same time, Icahn remained unenthusiastic about any of the alternative deals being bruited about between Yahoo and Microsoft in lieu of an outright acquisition.
"Sometimes, you have to have patience," Icahn said. "But I believe if it's not this month--it'll be six months from now. But it's crazy for the company now to do this alternative deal and give the store away because obviously, an alternative deal is a poison pill. Because once you've done an alternative deal and given search to Microsoft, you don't need Microsoft to buy you anymore. So, that would be a poison pill."
Icahn also said a partial sale would leave Yang and the current board in charge, which he said "would be terrible for shareholders."
More rumblings in the ongoing Yahoo-Microsoft saga, with Carl Icahn calling for Yahoo CEO Jerry Yang's head. Meanwhile, the board has set its annual shareholders meeting for August 1. And just to keep things extra interesting, Sue Decker, the No. 2 exec at Yahoo, got up at a public forum to say that yes, we still are talking to Microsoft. Check out my interview with CNET News.com reporter Dawn Kawamoto, who deconstructs the latest chess moves.
Had it not been for Jerry Yang and Tim Koogle, Mark Cuban would be just another middle-aged rich guy. Not George Soros-rich, but with enough shekels in the bank to spend a life of leisure.
Hey guys, I'm baaaack
In 1999, he sold Broadcast.com to Yahoo for the princely sum of $5.04 billion in stock (and then was smarter than the average bear by cashing out before the bubble burst). Up until then, Cuban was working with the proceeds from his 1990 sale of MicroSolutions, a computer reseller, for $6 million. Not bad, but not enough to buy a professional basketball team.
Now Cuban is part of the 10-person slate that Carl Icahn is proposing to take over Yahoo's board. Talk about a smack in the head! Of course, Cuban's a sharp tack and knows the ins and outs of the Internet business better than most. Still, maybe it's just me, but talk about biting the hand that feeds you. Yeah, I know, it's business, not personal.
