Icahn and I will: Carl's war on eBay goes NUCLEAR over Skype Carl Icahn has pressed the red button in his war on eBay and has demanded access to all its records documenting the sale of VoIP firm Skype. The irate investor has published another of his infamous open letters in which he savages eBay management, and board director Marc Andreessen in particular. Icahn wants to launch a full …
He isn't that uptight, he couldn't care less about the points he is making, he only raises them to get the stock up and then sell.
And when he does, he will say something like: ok Marc you won, I will console myself counting the couple billions I made trading your stock.
It isn't illegal to opine on a company or its management. You can't accuse someone of a crime, but that's not what's happening here. He wants information to either confirm or eliminate his suspicions. That's well within the law.. Employees have the same rights to opine, but while it isn't illegal it is a zero tolerance, questions asked, no unemployment provided, termination offense in all 50 States to disparage your employer publicly. But you can't fire Icahn.
El Reg said:
Icahn repeated his allegation that Andreessen had a "clear and insurmountable" conflict of interest
That's an accusation that Andreessen committed a felony, which absent reasonable cause for such an allegation is slander, not fair criticism. Having been on a board when such an accusation was made by a member*, I know how lawyers respond to that sort of thing. Particularly given Andreessen's statement:
he disqualified himself from the eBay board when they worked to separate Skype and eBay.
which should be easily confirmed by consulting the minutes of the meetings and further constitutes malicious intent on the part of Ichan.
*title of the email sent to the entire membership of the corporation: "YOU F*CKING THIEVES!!!!!"
Which is essentially what Ichan is saying about Andreessen.
I applaud your service to your church by serving as a Board Member. It must have been a church Board you were on, because every Board I've ever been on had a quarterly purse and whoever received the most death threats or screaming Icahn type letter threatening to sue won the purse. We used to have a celebrity read the best at the annual shareholder events. For a few years the back cover of our annual report was a serial killer type layout of snippets of letters & rage email we had been sent. We stopped doing that when we passed $20B annual. Barbara Bush called it creepy.
If nobody wants you dead you're not being a good Board Member. If your fellow Board members are suing shareholders, or other Board members, I doubt their commitment to the company. Nobody likes a wealthy person that's a crybaby.
I mentioned it up there ^^ a bit, but just so it's clear. Icahn has no power. His strategies all consist of gathering enough voting shareholders into his camp that they can force change by vote. He's like a proxy firm, without the excitement of back alley beatings and missing family pets you get with a proxy firm.
The only reason his strategies work is that, with a few exceptions, most good size investment groups are comprised of complete fucking idiots. As a rule, the more defined an investment group is, the dumber they are. Places like SAC and other serious investment groups and banks are not dumb (at least at trading). However, the Women's Traditional Equestrian Riding Group is dumb. The Wives of Dentists Holding Group is dumb. Really dumb.
Those groups are all basically what wealthy people do with their significant others to keep them out of their hair. Almost inevitably the group will be Chaired by the wife of the richest person in the room and go down in wealth from there. The trader or brokerage for the group is always somebody's son or nephew or some in-law, and they know nothing about what's going on. They'll believe anything an 'important person' tells them. Unfortunately, there is no correlation between wealth and intelligence.
Now, Carl isn't dumb either. He knows full well that he's talking shit. The world of CEO, Board members and VC's is fairly small. He also knows that unless it's a legal issue or related to regulatory filings that Conflicts of Interest aren't a thing. Within every company's by-laws is the section that deals with disclosing any potential conflict and what to do with them. Depending on the by-laws most conflicts can be acknowledged and waived by a simple Board majority vote. It isn't even within the investors realm to know about the vote.
eBay may suck, but Icahn isn't the only big finance player out there. eBay can't enter into a transaction that has conflicts because the by-laws also say that legal has to acknowledge the Board vote and validate it before company property can change ownership.
All the 'dumb investors' aren't go in to wade through a that legalese. They'll believe Icahn or they won't. If they do we'll see how long Carl wants to pay his legal team. If they don't, Carl will crawl back in his hole and stay there till he pops out to repeat the exact same stunt elsewhere.
He's the financial equivalent of a conservative political pundit. Full of shit, irritating, and impossible to get rid of. He fucking sucks.
Honest question here. Aren't SOME things regulated by law, such as fiduciary duty? Isn't that why such things as insider trading are legal no-no's?
What I'm getting at is that Ichan seems to be alleging either failure of fiduciary duty (selling at an avoidable loss) or insider trading, either of which IS a legal matter. Ichan may be a jerk, but even jerks have a point sometimes, so has anyone taken a serious look at his allegation. If so, why doesn't it have merit?
I'll explain why his claim has no merit, as well as why everyone knows it.
There's a misconception among the general public that fiduciary responsibility for publicly traded companies means they have to 'make as much money as possible', but that's patently, grossly incorrect.
Fiduciary responsibility for publicly traded companies means the law requires the company to uphold the broad principles stated in the company's mission statement in accordance with the by laws of the company and the laws of any country where the business operates.
As long as those rules are followed, Icahn has absolutely no basis for opening his mouth. It's well within Icahn's rights to open his mouth, but exercising that right does not mean anything valid or useful will come out of his mouth.
Compliance with those rules would have been documented, witnessed and verified for compliance by in house legal, then double checked by the partner firm that supplies the in house legal, then sent to another, undisclosed firm for review and final validation. Without adherence to the rules the legal department wouldn't have approved the deal. There's nobody better at avoiding liability than law firms. Plus their other corporate clients would, rightly, be concerned.
The company by laws, samples of internal articles for every operational issue that requires Board approval, an exhaustive concordance of the company's glossary providing the non-summarized definitions of terms used within the company, the situations in which the specific definition of a term is used, the documents in which the various definitions of a term are used, and the relevant (if any) government regulations that the various definitions of a term address. Additionally, any commentary made by independent auditors, legal firms, financial institutions, government agencies, subject matter experts, regulatory bodies, as well as potentially concerning comments made by past Board Members, Senior Executives, expert technical staff, partner companies and officers of the court.
Some companies also provide non-GAAP financials if it's appropriate. That's not normal, but does happen. The developmentally challenged Jedi that runs Overstock (or did, I don't know if he's still there) really likes to do that.
Most of that information isn't required for regulatory compliance. It is provided as extra information to financially capable potential investors in Class-A aka Voting Shares. This part is really important to your point. Another misconception among the public is that buying a share of a company gives you a vote in the management/operations of a company. That's just wrong.
While some companies do grant Class-B, common shares a vote, but that isn't the norm. It's not uncommon to have a B to A equivalency conversion for, voting purposes, but the rate is sky high. Stuff like 20,000 Class-B is equal to one (1) Class-A voting share. Most companies don't make their Class-A stock available on the common market. They don't want a bunch of clueless knobs interfering with the business. Class-A shares almost always come with voting privileges and in the event the company is sold, merges with another company, or collapses Class-A shareholders get their money first, and whatever is left over goes to Class-B holders and non-investment debt holders. Class-A share holders are generally huge institutional investors and super wealthy individuals.
That's crucial, because not only did Icahn have access to all the company's rules and policies, he has access to far more detailed information than Class-B shareholders have available to them. Icahn is an ass, but he certainly isn't dumb. His legal team aren't dumb either. Icahn isn't just playing with his own money, he's got other people's money as well. He has fiduciary responsibilities too.
What all that means is that Icahn had enormous resources made available to him prior to buying the first eBay share. If he didn't review the eBay provided documents he is now in really deep shit. Not only had he failed in his fiduciary responsibilities, he has lied to his investors because you have to state and sign documents stating you've been informed of all issues and that you understand them before he could buy Class-A shares.
Alternatively, he did review and understood the company's by laws and policies and would have known all the company's ins/outs rules prior to investing and knows he can't do shit, but he wants everyone to listen to his barking anyway.
This post has been deleted by its author
Didn't read the article did you?
Andreessen added that he disqualified himself from the eBay board when they worked to separate Skype and eBay.
If you disqualify yourself from any votes or proceedings dealing with a transaction in which you have a potential conflict or even the appearance of a conflict of interest you have met your fiduciary responsibility. Case closed.
"Icahn repeated his claims that the eBay boss had a "clear and insurmountable" conflict of interest in the sale, because his investor group was involved in the group which bought Skype for $1.9bn in 2009 - significantly less than the $2.6bn eBay originally paid for it in 2005.
In 2011, Microsoft snapped up Skype's service for $8.5bn."
But if I'm reading this right
CEO orders buy Skype at $2.6Bn in 2005.
CEO orders sell Skype at $1.9Bn in 2009 loosing $700m in the process to another company he has more of a share in.
Other company sells to Microsoft and trousers $8.5Bn IE a $6.6Bn profit.
Yeah, I'd smell a large rat here as well.
...between 2005 and 2009? Knocked a few points off the Dow Jones, caused a mild worry among the international finance set, I seem to recall some events or other that might just have taken the shine off the dollar value of a tech business, now what could it have been...
It does look fishy, no doubt. But there's a lot more going on here than it might seem. The only times Skype has ever actually made anyone money was when it was sold the very first time and when MS bought it (the MS deal isn't straightforward, at all. MS bought a lot of debt and license agreements with other countries, as well as Skype). That's it. Everybody else who has owned it, developed capabilities enhancements for it, failed to block Skype traffic or sat too close to Skype on the bus has lost money. Crazy, stupid money.
It was a joke for a long time that if you were headed for divorce the best thing to do was buy Skype because it's guaranteed to eat all your money so the (ex)wife can't get it.
Nobody has ever been able to make Skype profitable. Every tech company on Earth has looked at Skype at least once, sometimes several times. But once you get to digging into the details and people run off screaming. There are problems with Skype. Bad problems that require enormous resources but are key to its functionality. People think they can fix the problems, but so far, no luck.
Go back and look at the open conversations shareholders have had with CEO's about ditching Skype. You'll see a familiar weasel faced little fellow bellowing how Skype is a loser and if you don't cut the losses and ditch Skype I'll sue for failure of fiduciary responsibilities. Guess who that person is. His name begins with an 'I' and has four letters after.
Skype was sucking zillions of dollars up and eBay was heading toward a disappointing quarter (and year). Jettisoning Skype stopped the bleeding and brought some much needed elastic money into the company. Everybody was happy as pigs in shit just to get Skype off the books. Skype is like that videotape from the movie the Ring. Once you realize how cursed Skype is 'fiduciary responsibility' demands you get rid of it. It's OK to make some bad choices, but you've got to fix them. That mess Skype has to go.
So now an investment group has Skype, but nobody wants it. The investment group has become those pigs Jesus stuffs with demons and runs into the ocean. You know, fuck that. I'm not going to that beach.
So they need a giant, global company, with scads of cash, a need for a useful VOIP offering, a history of having huge parties when they unveil hideously awful new products and led by a madman who absolutely doesn't give a fuck. Nokia's got its hands full bailing water from their sinking ship (they did give Skype a 2nd look though). Google has their own VOIP solution, Facebook is kind of interested, but Zuckerberg is young and inexperienced, he isn't an idiot.
What other giant company., with money, could possibly be out there? Yep. They meet all the criteria for a good Skype buyer. Now that eBay doesn't own it anymore maybe they'll talk to us. eBay had made everybody happy by ditching Skype and other than MS the investment group is the only people who are interested. That least sentence is crucial!
MS was never, ever, not in ten billion years going to bail eBay out. No amount of money would change that. Everybody who needs to know why that is already knows and that leaves eBay stuck. The only reason anybody bought Skype at all was the eBay CEO twisted some ears. He knows people who will buy Skype, right now, and save the year.
If anything eBay was acting with the greatest level of fiduciary responsibility by just getting rid of Skype. That's why who you put in charge is so important. They know people. eBay was under very, very heavy pressure to dump Skype, yesterday. They sold it to the only people on earth who would buy it and everybody is happy. What happens with Skype after the sale doesn't concern eBay or Icahn.
When eBay sold Skype they sold it to the only people who would buy it. Skype was worth less than nothing to MS if eBay was selling it. MS wouldn't have taken it if eBay offered to pay them to take Skype. Icahn knows as well as anybody that's the truth, he's just hoping to win twice (he made some money when eBay sold Skype).
Everything about that deal is straight up and legal. If Icahn thought he could do better he should have countered the investment groups offer. He didn't though did he? Nope. He was happy as hell Skype was gone. Now he's just being a whiny little dick.
>>The investment group has become those pigs Jesus stuffs with demons and runs into the ocean. You know, fuck that. I'm not going to that beach.
Me either.
However that Jesus fellow sounds rather busy, after all there are only so many pigs you can shove demons into and then run into the Ocean by yourself. He should consider hiring some employees or getting automated.
Good on him, at least he has determination, I guess.
The thing I don't like is that he's always dragging his money-grubbing mouth into the media like a shrill housewife and making everybody take a side.
Icahn : I don't give a flying monkey's about your money issues. It's all private money, nothing to do with me and nothing I can do about it even if you are right. And given that whenever I hear your name it is about you screaming about something you just bought into, I have the gut feeling that either you're an ass, or you're an incompetent ass with too much money. So go wash your dirty laundry in private and keep it away from my ears.
Every big lot of pennies Icahn has ever made was down to his shrill housewife ways of forcing people to take sides. As savvy big time investors go, Icahn is just average. He has never shown any real talent for assessing the market. Thing is, he doesn't even bother to hide the fact. There are more than a few interviews with him saying 'I didn't know what that company did. I simply identified an opportunity in their operations to make some money'.
I agree with you he should be proud of his determination. And he is a smart guy, no doubt. I just don't like divisive people. Divisive issues and such I can accept. But divisive people suck. It's just such a negative way to go about things. Causing ruination and despair so you can profit from it is shitty behavior, plus it's just too much work. As efficiencies go, what Icahn does is the least efficient way to do things.
I'm lazy, so I much prefer other people to do the work because they will benefit from it, not because I backed them into a corner. Yes, trapping people does work, but look how silly he looks. Walking around like a badass but then constantly getting smacked around by the biggest creampuffs in tech. Bill Gates, Steve Jobs, Larry Page, Michael Dell, Tim Cook, that annoying little guy from Sun. The list goes on.
He is the bully of the finance world and it has made him wealthy. But come on. If you're going to brag about your reputation and the leverage you have, being torn down, publicly by a guy dying from liver failure and a guy who escaped from the Over 70 Men's Wear Department of a JC Penny in one of the forgotten plains States it might be a good time to act your age and either get some class or go home and bathe in your high fiber milkshake.
Respect, Mr. Icahn. You are taking your rights as a shareholder serious and have real questions for the board. Shareholders are the ones who own the company and it is their responsibility to audit the board. Why should wazisname get away with sinking 700 mio? With shareholders taking more responsibility a lot more of this incompetent or even criminal behaviours would come to daylight.
Do you know why accountants always tell their clients not to get into day trading? Because they have no idea about how things actually work.
Carl Icahn was one of the biggest advocates for the sale of Skype to anybody who made an offer. He threatened to sue if eBay didn't ditch Skype. eBay did exactly what Icahn wanted and he sued them anyway, but only after picking up a few hundred million more in eBay stock.
Carl's funny like that. He isn't ever looking out for anyone who isn't Carl. He will sink the ship everyone else is in, even if he's in it too, if he gets a bit more money. Take a look back at Icahn's history with eBay and Skype. You might be surprised at how incredibly wrong you are.
@Richard Altmann
Icahn is exercising his rights as a shareholder by asking questions of the board and making his voice heard. Whether that is him "taking responsibility" or not largely depends on the substance of those questions (allegations, really).
As a visible (and very vocal) personality with access to the very best information and legal advice available, one might argue that being responsible would entail him leveraging those resources to provide insightful direction to the other shareholders and to the board.
Instead, he is doing what he always does, which is to try and make more money. No problems in principle but Carl's particular path is to bluster and bully his way through with no concern for the companies he is investing in, nor his fellow shareholders.
That might be his 'right' (both as a shareholder and as a human) but I'm not sure it is his 'responsibility'. It certainly isn't going to count well for him at the end of kindy when the teacher is asked if he plays well with others.
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