Will Icahn Bail from His Yahoo Position?

After the U.S. Securities and Exchange Commission gave Carl Icahn the green light to buy additional shares of Yahoo! Inc. (YHOO) stock last month, we wondered whether he would take them up on it. At the time, Yahoo! and Microsoft Corp. (MSFT) were in talks about a transaction that fell short of an outright acquisition, and it seemed imprudent to spend more money on Yahoo! when its future appeared so uncertain.

Since then, the kind of deal the companies might structure has remained a mystery. By contrast, there's been more attention on what Icahn would do if he wins his proxy fight and gained control of Yahoo in his proxy fight. Yahoo has openly criticized Icahn for not articulating a strategy for the company beyond trying to sell it to Microsoft, the billionaire's stated objective. Yahoo's management deserves criticism for botching the negotiations with Microsoft, but the current regime still appears to be a better option to run the company than Icahn in the absence of a deal.

Meanwhile, speculation is increasing that Icahn's bet on Yahoo will not pay off. Silicon Alley Insider suggests that any profit Icahn has made up to this point with his investment in Yahoo could disappear if he loses the proxy fight and the company can't agree on a search outsourcing plan with rival Google Inc. (GOOG). Even more disheartening is the possibility that even if Icahn does win the proxy fight and manages to convince Microsoft to acquire the company, it could come at a price tag closer to $27 or $28 a share than the $33 figure it last offered.

The logic behind a reduced offer is that much has changed since Microsoft first made its $44.5 billion offer in February, including a 10% decline in Microsoft's stock price, a deterioration in the online display advertising environment and a belief that Microsoft is not as keen on a deal as it once was. Alley Insider concludes that rather than buying more shares, Icahn could even turn seller and give up on his proxy fight.

Comments

[sweetreveng...:]

Carl Icahn didn't become a billionaire by making bad deals, and his heavy investment into yahoo shares will pay off for him, in the long run! If he can't convince MSFT to re-enter the deal, he could still make lots of money for the unhappy yahoo shareholders by breaking yahoo up into pieces and selling it off. The shareholders would be happy, I would be delighted, and yahoo would cease to exist!
And, I would be singing: "Oh Happy Days, Oh Happy Days, when Jesus walked, Oh Happy Days"!

2008 Jun 13 12:21 PM

[sweetreveng...:]

I already submitted my comment, but because this site is in partnership with the yahoo band of thieves, and they did not approve of the truth and facts that I put into my comment, they have played their Ace in the hole, again, and deleted my comment, and they say we live in a free country, maybe free by what the US government tells us, but NOT by Yahoo's standards. They are just a bunch of crooked communists, operating in the wrong country, as they will soon see.

2008 Jun 13 12:29 PM

[sweetreveng...:]

thank you hotlips shah

2008 Jun 13 12:29 PM

[grishick:]

I agree with sweetrevenge. Carl Icahn is not your average dude with an Etrade account and few thousand bucks to play with. I find it hard to beleive that he would count on MSFT marriage without getting a definitive "I do" from the groom in the first place. Here's my guess: between now and August Icahn slowly buys more shares at $19-23 per share, maybe even lower if he's lucky. After he wins the proxy, he sells search to MSFT, other pieces to other bidders and gets about $25-27/YHOO share overall, which is what some bloggers on this site estimated YHOO can be worth if sold off piece by piece.

2008 Jun 13 03:36 PM

[sweetreveng...:]

Hey Percy: didn't you learn how to spell in high school, or was that too difficult for your to handle? Sounds like you are either a yahoo employee or a yahoo supporter, which one, honey?

2008 Jun 13 05:48 PM

[pharma:]

Carl is not an investor. He is an extortionist. This how he has made his money with Mick Milkin help.

Yes, he tried to run business: TWA. It went into a bankruptcy and out of business in a hurry.

So, if Carl gets his wish taking over Yahoo with his own money, he will lose his ass. There are not too many buyers for Yahoo especially with cash to pay.

PS
In the present financial environment, there are not to many banks with a desire to lend him money for this kind of entertainment.

2008 Jun 14 01:32 PM