back to article Icahn laughs at Yahoo!

Carl Icahn has tossed yet another letter at Yahoo!, reiterating his claims that it botched a possible merger with Microsoft and detailing his plans for the company should he succeed in overhauling its board of directors. After booting Jerry Yang, Icahn says, he'll renew merger talks with Microsoft. And if that doesn't work, he …


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  1. Chris iverson

    considering this declaration

    I propose a new poll for the new name of Yahoo!

    A) Microhoo! (previous winner)

    B) Goohoo!

    C) Yaoogle!

    Some else please pick up where I started, Boss is looking and I may have to literally run

  2. J-Wick
    Thumb Up

    Microhoo! has too many syllables...

    how about 'Microo!'?

  3. Brett Brennan

    It's all about the customers

    Without the employee retention plan, Yahoo! becomes nothing more than a "war chest" full of customers (those with Yahoo! as a portal via their ISP, Yahoo! mail, etc.). I've maintained all along that this is the asset that Microsoft is interested in (along with sundry patents, software and equipment), and Mr. Ichan's proposal reflects this reality quite starkly.

    I guess the real question is about valuation. What is the conversion cost for Microsoft or Google to acquire the portal and services customers from Yahoo! if Yahoo! were to terminate business today? In other words, what is the "break-up value" of Yahoo's primary asset, the customer base?

    If the cost per customer conversion (usually somewhere around US$10) exceeds the value of the company at the current offer price, then the offer from Microsoft is too low. If, on the other hand, the cost is less than the offer being made, then Icahn is completely correct: kill the retention clause and sell the company, if this is what the majority of the owners (ie, shareholders) want.

    Unless Jerry Yang and Yahoo! management have a business plan that will return as much value to the shareholders over the next 3-5 years (through stock appreciation, dividends, etc.) as selling the company will provide, then they need to be removed and the company sold.

    Remember: Jerry Yang and his management team are NOT the owners of the company. Their job - first and foremost - is to provide the owners with a return of their investment. Period. If Jerry doesn't like that idea, then let him and his managers offer what HE thinks is a fair price to the shareholders, and take Yahoo! private, where he can do whatever he wants with it.

  4. Anonymous Coward
    Anonymous Coward

    Third, I'd like to reverse my position...

    # Third, Please Microsoft make a good offer... p-l-e-a-s-e--e-e-e-

    # Fourth, I promise to sell if you throw me a bone, so p-l-e-a-s-e-e-e-e throw me the bone MS!

    # Fifth, p-l-e-a-s-e-e-e-e Microsoft throw me the bone. $33.5 would be enough p-l-e-a-s-e-e-e-e

    Yeh we get it, he knows he won't get $40, not $37, and maybe not a vague promise of even $33.

    They'll get $50, all they have to do is improve their advertising conversion price. If MS can improve their algo's then Yahoo can hire the same engineers and do it themselves. Schmidt talent is he hires good people. Google success isn't from Schmidt it's from the people he's hired.

  5. Mark

    re: It's all about the customers

    Remember that one year after selling Yahoo, there will be no Yahoo. It will be therefore unable to produce ANY value to its shareholders.

    If giving value NOW to shareholders was important and the sole measure of success, Yahoo could sack halfthe staff, sell off 80% of the buildings and 90% of the computers.

    The money saved would increase profit for that quater to stratospheric levels.

    Ignore the profit figures after that, they are not, apparently, important.

  6. Herby

    But what happens if the cursomer base doesn't want to be Borked?

    It may well turn out that the customer base that Yahoo! has has no intention of being assimilated into the Borg of Microsoft, where they already know the level of service they will have. That is why they went to Yahoo! in the first place. So, while the value of a customer to Yahoo! is $x, they value of the same customer (who won't convert) is ZERO. This indicates that the current situation is the BEST.

    I for one being a current Yahoo! customer, would not like to be "converted" to a Microsoft customer, even though the service is "free" in both regards. Personally, I'll go somewhere else, and recommend that others do the same. Mr. Icahn doesn't understand that there ARE fickle "customers" out there, and downgrading service is not a retention plan. So, poison pill, or not, it probably won't work.

    Also note that the nice federal anti-trust people haven't had their say yet. When the takeover doesn't happen, is everyone going to sue Carl Icahn (and get him to pay?)?

  7. Anonymous Coward

    re: It's all about the customers

    Actually, it's about chumming the stock waters to drive the price up, temporarily, so that Carl Icahn can make a few hundred million.

    The current employees will be out of work but that won't be Carl's fault, will it?

  8. Anonymous Coward
    Dead Vulture

    ICahn's pretty full of it

    A deal with Google? Wasn't a deal with Google going to be "scrutinized" by the feds? Does this psycho think Google wants to do a deal where it's going to get itself anti-trusted? Somehow I think not. So, him even proposing such a deal is a sign perhaps of a case of dementia on his part, and a hope of dementia on the parts of others.

  9. Simpson


    "If the cost per customer conversion (usually somewhere around US$10) exceeds the value of the company at the current offer price, then the offer from Microsoft is too low"


    It does not matter if the buyer is MS or someone else. The value of an asset, is the highest price that someone is willing to pay in an open market. If there was value, someone else would offer more.

    Prices of assets go up and down. Coin flips are heads or tails. Percieved "value" or the "stats from the last five coin flips" have nothing to do with the present or future reality of any situation. The price may go up or down in the future, but the value of any item (beyond emotional) is the price that someone is willing to pay.

  10. Anonymous Coward
    Paris Hilton

    icahn doesn't care about shareholder value, only his

    "So why don't you stop dancing around the subject and publicly offer to sell the company to Microsoft for $34.375 per share and promise to cooperate completely?"

    Because you've just stated that you'll sell to them for $33, all they have to do is wait for you to fight it out, wow great strategy.

    Paris because she'll do anything for money too.

  11. Anonymous Coward

    Oh please

    Can someone get a hitman to off Icahn? He already shat over BEA, now he's going for Yahoo!

    Please don't kill Yahoo!

  12. Charles Smith

    Best interests at heart?

    Is Icahn interested in Investing or just the asset value?

  13. Michael Overton

    Icahnn is another Yahoo

    This shows the problem with corporate structure and the relationship with shareholders: Icahnn sees short-term profit from the sale of the company, and he's convinced a bunch of shareholders the same. They'll make money, but it won't be good for Yahoo, and it won't be good for Microsoft.

  14. Trevor Pott Gold badge
    Paris Hilton

    I think people are confusing emotion with economy

    Now, I am not a capitalist at heart, far from it, but even I seem to have glommed onto a few facts that many of my fellow vultures are missing here. First: what is "good for Yahoo" doesn't matter. "Yahoo" isn't some fluffy bunny you watch grow, and cuddle and think happy thoughts about. Yahoo is, like it or not, a place where a group of dudes invested some money with the expectation that when they sold their piece, they'd get more money out of the company then they initially put in. You don't make money from "dividends" and you don't make it from (apparently) long term investments.

    The modern financial climate dictates that if you have a chance to realize a gain on your initial investment, you ask yourself a simple question: "if I don't sell now, and take the gain that is on the table, what are the chances that continuing my investment will realize a larger gain down the road?" The other side of that question is "how fast is my investment growing in company [X]? Could I sell my shares in this company, invest it in another company somewhere else, and make money at a faster rate than I am making here?"

    The thing no one wants to face is that this is not about Microsoft buying Yahoo. WHO is buying yahoo is irrelevant. The fact that Yahoo as a company will cease to exist after the sale is irrelevant. That the shareholders could achieve a greater return on their investment by selling now, than (in theory) letting yahoo continue to circle the drain for another [Y] years is the only relevant thing.

    If the current administration of Yahoo have a viable, solid plan that the investors believe in to get Yahoo back on track, and get that share price soaring, then selling to anyone, Microsoft or not, doesn't make sense. If the current administration can't demonstrate they have such a plan, and raise investor confidence enough to believe that this is a better alternative to selling, then Yahoo has a duty, legally, to it's shareholders to sell.

    That all of it's employees would lose their jobs is irrelevant. That is would narrow the competitive landscape is irrelevant. That is would screw the customers is irrelevant. The only relevant thing is what will bring the highest share price, and thus profit, to the shareholders.

    This is the capitalism that USians chose, fight, and die for, so there's no point griping about it.

    That said, had I my druthers, I'd say to those in charge of Yahoo: damn the torpedoes and FULL SPEED AHEAD!

    Paris, because even she realizes Microhoo! is a horrible name.

  15. Chika
    Paris Hilton

    Icahn see trouble

    Yup. Icahn. On one side, he seems like a kiddy having a tantrum. On the other, he comes off like the worst type of asset stripper. "I want, and I'll keep on stamping my feet until I get what I want." It seems obvious that he wants nothing more than to get as much dosh out of selling the company off to whoever (it no longer matters who might be the buyer). Yang won't jump, so the tantrum just gets worse.

    It'll end in tears, one way or the other. And the Paris angle? Well, we are talking about boobs, aren't we?

  16. Ed Gould
    Gates Horns

    Yahoo selling out to anyone

    I personally think it will loose its entire customer base and those will go over to GMAIL. It will be some work on the Yahoo group side but it will be doable, if YAHOO doesn't pull the plug right away.


  17. Ralph B
    Thumb Up

    @ Oh please By Anonymous Coward

    > Can someone get a hitman to off Icahn? He already shat over BEA, now he's

    > going for Yahoo!

    Yeah, and I know some Motorola shareholders who would be happy to chip in on that project.

  18. Anonymous Coward
    Anonymous Coward

    @Brett Brennan

    Your post seems to have inexplicably got attached to the wrong strap line, as there is fuck all regarding the customer in your post.

  19. Anonymous Coward

    Money money money...

    Those fools who are claiming the investors returns are all that matters are likely a. Republicans (or equivalent), b. Hate technology.

    For starters, it's been made clear that Icahns motives are driven by only HIM gaining the maximum financial value out of this extortion, it is also clear that any change of the board will depreciate its value despite any intentions to hire some superstar new CEO, and a Microsoft sell off would leave Yahoo shareholders no longer shareholders, what of those happy to keep their stock? Also do people forget Yahoo had a higher than $33 share value prior to this? If people want to keep making money, they'd have a better chance if they just let the company run as is!

    But yes theres also the factor I imagine many will leave Yahoo and Yahoo services and no doubt there will be boycotts from the userbase, without the userbase any share value will sink to naught, as a company without a customer base is useless. I know as paid member of Flickr and a YahooGroups moderator I would take my business and my userbase elsewhere if Microsoft took it over. But lest we forget though, Microsoft has already declared their lack of interest, so a deal is unlikely and Ichan will be left looking like the King with no clothes!

    Also full points to Icahn for being a comedian, so okay, Yahoo doing a possible ADVERTISING deal with Google is raising anti trust questions, but combining the KEY services of Yahoo to Google won't? Hilarious! Please keep up the comedy, it shows the fool you are.

  20. Trevor Pott Gold badge

    @AC re: money money money

    "Those fools who are claiming the investors returns are all that matters are likely a. Republicans (or equivalent), b. Hate technology." At least one of those “fools who are claiming the investors returns [is] all that matters” is a Sysmin who, by ‘merican standards, is very left leaning.

    The point isn't "all that matters are investor returns." In the grander scheme of things, morally, socially, ethically, certainly there are larger things at stake. The point is that LEGALLY, in the US, all that matters is investor returns.

    And LEGALLY, in the US, what you think, or I think, or anyone else but the people with the shares in the company think doesn't matter a bent bottle cap.

    Sure, we can all sit here and engage in some protracted collective form of mental masturbation over the subject, but regardless how of you or I emote over the subject, it is determined by the rules and laws that poor ‘mericans fight and die to protect: namely, that what is in the best interest of the SHAREHOLDERS comes before the best interests of the company itself, the employees, the customers, the general public, or anyone else that may have been missed.

    Try to actually understand what others have posted, thank you, rather than insulting others by calling them republicans. Quoting the rules doesn't mean you agree with them.

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