Yahoo! sets date for Icahn showdown Yahoo! will hold its annual general meeting and shareholder vote on Carl Icahn's proposal to replace the board of directors on 1 August. Icahn confirmed yesterday that he will sack the company's co-founder Jerry Yang if he wins the vote. He said Yahoo! needed to get rid of Yang and at least part of the board of directors in …
"and at least part of the board of directors in order to show Microsoft it was serious about any deal"
From 'Colonel Homer' where Homer Simpson becomes the manager of a country and western singer:
"Now before we negotiate, I have to tell you I'm desperate to unload Lurleen, and I'll take any offer."
So let me get this straight, once Icahn has removed the man who wanted $37 at least in a weak market, and more than $40 before the downturn, how much a share does he expect to get from Microsoft? Seems to me he's set the price at $33 max, but once he's weakened the board he can get maybe $29 or less, $25 perhaps, Balmer will negotiate tough.
He's not an idiot and must know this. So what I reckon his motive is this, I bet he holds a lot of MSFT shares, and the deal would have been good for MSFT and so for him it would be a good deal. But Yahoo cannot consider how much MSFT stock Icahn holds or the Firemans pension fund holds, it cannot consider whether it's good for shareholders of MSFT, only for shareholders of YHOO.
So I reckon the board should consider how much stock in MSFT Icahn holds and determine if his interests are the interests of YHOO.
To get rid of the CO-FOUNDER of one of the DotComs most successful companies is bloody stupid. And as said above, you get rid of the board who are part responsible for its current value and its value will plumet and those greedy stupid technology hating retirees will end up coming out with a loss than any profit.
I'd laugh my arse off if he does get the board replaced and then tries to sell it to MS only for MS to say 'Sorry we said we're no longer interested, go away!', and be left with nothing. The board would also probably have no experience or understanding of Yahoo's actual business and probably destroy the company and leave all their shareholders with shares worth naught.
I hope Icahns attempt fails and someone shows icahn has more stock in MSFT so would benefit from any potential sabotage of Yahoo and thus loses any vote!
If there is any serious chance that Icahn gets his way, the board should quickly open source all software assets of Yahoo that are not already under an open source license. Then if Icahn does get his way, the entire board should resign, start a new company, call it similar enough - say YabaDoo - just to stay narrowly clear of trademark infringement and rebuild Yahoo 2.0. Then invite all Yahoo shareholders who will no doubt offload their shares when Microsoft comes in to buy Yahoo 1.0 so they can invest in Yahoo 2.0 with the proceeds. Also invite all former employees of Yahoo 1.0 to resign and start working at Yahoo 2.0.
This way Microsoft will pay a shitload of money for a) technology they have no use for (its all based on open source BSD Unix et al), b) a bunch of employees that don't want to work for them and leave anyway, c) the Yahoo trademark and domain names along with a bunch of URLs pointing to Yahoo 1.0 which is about the only thing that might have some value to MSFT, yet I doubt it would be worth paying that much for.
It would seem this is the best way to protect long term interests of current Yahoo employees and shareholders (as opposed to speculators, who are share-traders not share-holders). Icahn for example is not a Yahoo share-holder, he's a Yahoo share-trader.
I think not, as soon as Yahoo! said "sod it, lets open source it!" Microsoft would not pay a penny per share. Microsoft would have full access to all of Yahoo's source code, it would be open source after all, they could read it and go "ohh, so thats how they do that!" and built a system based on Yahoo technology without touching the open source code.
The "poison pot" would actually poison Yahoo and give all of Yahoo's competitors an insane edge, effectivly killing Yahoo. A case of cutting of their nose to spite their face.
Icahn isn't above playing hardball, which he does regularly to get his way.
He'll win this, simply because mr "activist investor" always does get what he wants eventually.
He always says it's in the best interest of the company and its investors, which of course means him. He's a bully that's made many people quite wealthy if you follow what he does.
Of course Wall Street adores him, just like they do with Warren Buffett. Icahn's always the one they support over any corporate CEO he's targeting.
A quick search on 'Icahn fails to' revealed he tried and failed to win a Motorolla board seat, failed to stop Batus from taking over Marshall Field & Co, Failed to gain control of Time Warner, failed to buy Lear .....
So the idea that whatever Icahn wants he gets is rubbish.
Plus he's never addresses the main problem with his bid... the price he think MS will pay for the headless corpse he plans on creating....
What's the problem with selling the company for a decent amount of cash before it continues to fester and deteriorate compared to the likes of Google, etc? The only reason the current CEO doesn't want to sell is that he can't admit they have lost to Google.
They have no plan for sustained growth, sell this bitch before she jumps the shark.
Maybe that is all MS is after, but if Yahoo! went for the OS pill, basically opening up their entire service to the world (even Google which uses FOSS doesn't show their source code) all their competitors who are trying to build a "Yahoo! beater" will actually be able to use the Yahoo! code to do it. With such a saturation the advertising power of Yahoo will slip down, so OS is a lose/lose situation.
Icahn is a vulture (not related to El Reg), out to get the most cash out of something he didn't build, quickly. If he manages to get Yahoo! sold, it will be far below the actual value Yahoo! would represent to Microsoft, and it won't be to Microsoft either.
@David: You're right; MS wants the customers, not the technology. If they wanted the technology, they'd have basically cloned the Linux kernel by now just to avoid looking stupid yet again when their latest OS crashes multiple times during its presentation.
OpenSource may still be the way out: let Microsoft try to port the algorithms so they will run on their own trap MSISS; meanwhile, lots of nice, small, and above all QUICK search services will spring up using a simple LAMPP approach... mind you, search business is not really about the software; it's the hardware and bandwidth, and the amount of advertising you can manage to glom on to the search results. All of which works faster on OSS based servers -- ask Google for a quote if you like -- than on what Microsoft would have to end up using, if only so as not to look completely stupid for selling an operating "system" and server environment they themselves find seriously lacking.
It was said that Icahn failed here and there . . "failed" is a very relative term in that regard. When he failed to force a large company to do what he has in mind it still made him 300million dollar.
What a failure - poor him. I doubt he cares to make the world a better open source/ web 2.0/ web 42.0/ yabado place.
There is absolutely no proof that Yahoo would lose out if they open sourced their technology. The notion that a company needs to keep its tech under wraps or else they go bust is often repeated but that doesn't make it true. It depends entirely on how the company is run, some companies may indeed go bust if they open their tech, some companies may thrive. It's not as clear cut as all those hearsay-wisdom-repeaters would have us believe.
When Apple dumped all their modifications to KHTML, the rest of the world was so totally overwhelmed with the amount of code that they couldn't keep up, the project actually complained to Apple about the size of the contribution. This is a clear indication that if you keep developing and refining your tech on a fast pace, others will be so busy trying to catch up with you that they still won't have an advantage over you even though they can see and use all of your tech.
Certainly, if all of Yahoo's employees and its leadership were to start Yahoo 2.0 as has been suggested, they would know how to use, maintain and further develop all that code. Microsoft would have a serious job on its hands to learn to understand, use and adapt it. By the time Microsoft would be through the learning curve and through the effort of integrating it all, the new Yahoo 2.0 could have moved much futher and maintain their competitive edge over Microsoft.
Of course you cannot sit on your laurels when you open source your tech. That is about the only thing that isn't arguable. Maybe the fear of open sourcing one's jewels has a lot more to do with the realisation that once its out there one cannot rest on one's laurels, just sit back and watch the money roll in, one has to continue working hard, one has to keep going. Let's face it, we all have the tendency to get lazy when the opportunity arises.
If the current Yahoo wanted to open source their code so they could use it again in case they want to start over after selling out to Microsoft, they could custom design an open source license with conditions attached. It's their code, they can impose any conditions they like, even totally ridiculous ones like "this code must not be used by any company located on the 13th floor".
Thus, Yahoo could open source their stuff with a viral condition which says the code must only ever be run on a BSD operating system, must never be run on any machine that runs a proprietary web server software, must never be run on any machine that runs a proprietary database server software, or even, that it must never be used by any company that has more than 50% market share in the targeted industry, that it must never be used by any company where more than 5% of the workforce use Windows, must never be used by a company with more than 5% of its computing infrastructure (whether rented, leased or owned) running Windows, etc etc etc. You could even design restrictions for shareholders, like combined voting rights of all shareholders not meeting the conditions are either restricted to a maximum, say 25%, or else the license becomes invalid. If you put a bunch of expensive lawyers in a room to design a watertight system of conditions that won't hurt yourself but your most dangerous competitors, I am sure they will come up with enough legalese to make it next to impossible for those competitors to use the code. Where there's a will there's a way.
In such a scenario, MSFT would still have to purchase the company to get ownership of the code so the licensing restrictions won't apply to them by way of becoming the new proprietors of the code base. Also, if Microsoft did acquire Yahoo with such a license out there, they would then make sure that the restrictions aimed at Google will be enforced. They would even do that if they are only interested in Yahoo's customers and order books and not in the technology.
In fact, I wouldn't even be surprised if Microsoft would still agree to purchase Yahoo if the Yahoo board made it a condition to keep all the technology and half the employees, simply selling Microsoft their customers and contracts.
"They have no plan for sustained growth"
There is no such thing as sustained growth. Growth is always temporary. At some point you will hit the wall, the faster you grow, the faster you approach the wall, the sooner you will hit it.
There is nothing wrong with running a business simply for profitability even if it doesn't grow, all it has to do is keep up with inflation. In fact this is far more sustainable than any growth strategy can be. In any event, for as long as a business is profitable, that should be good enough. If you would like to be invested in a business that does grow, buy shares of a company which does, your choice. Don't force your own idea of investments on everybody else, some will be more interested in long term sustainability and they should be allowed to make that choice, just as you should be allowed to make yours.
If everybody starts chasing the quick buck and nobody remains to support long term strategies, that can only hurt all of us. There has to be a balance between short term and long term investments. In fact one might argue that in this day and age we already have too much short term thinking and too little long term thinking. It is that short term thinking which has caused most of the problems we have today, economically, ecologically and politically.
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