Icahn "Encouraged" by Yahoo, But Retains Cudgel

Carl Icahn showed his cuddly side in a blog post yesterday discussing Yahoo! Inc.'s (YHOO) move on Monday to appoint him to the company's board. He claims to be "very encouraged" by his talks with CEO Jerry Yang and chairman Roy Bostock last weekend, which came just before a governance deal that ended a bitter proxy fight. But he's not quite ready to sheath his dagger.

"From prior proxy contest experience, I have discovered that a minority position on the board can be also quite effective," Icahn says.

Please stop me before I kill again.

Then again, effective for whom? Motorola Inc. (MOT) shares have fallen 33% since the electronics giant in April agreed to seat two of Icahn's board nominees in exchange for his dropping a proxy fight against the company. Shares of Blockbuster Inc. (BBI) have plunged 288% since shareholders elected Icahn and two of his nominees to the company's board in 2005. Shares of WCI Communities Inc. (WCI) have sunk 430% since the investor moved in on the Florida homebuilder in August 2007.

It's unfair to dump all of that on Icahn's doorstep, of course. There's only so much a dissident investor can accomplish with a minority board position. And while there's a clear connection between good corporate governance and performance, a strong board is no panacea for a company like Yahoo! caught in the vortex of powerful technological, economic and social currents.

Meanwhile, a souring economy, management missteps and industry changes bear much of the blame for the weak showing of some of Icahn's targets. In Motorola's case, it also remains to be seen what effect the company's move earlier this year to hire a new CEO and a planned divestiture of its handset unit might ultimately have on the company.

If Yahoo!'s future remains shaky, at least someone profited from the proxy saga. In a "farewell note" thanking his board nominees for their efforts during the campaign, Icahn said he would make a payment of $25,000 to anyone not selected to join Yahoo!'s board. Best of all, "You are not required to spend it purchasing Yahoo! stock," he quipped.

Touché. But hardly reassuring to Yahoo! investors.

Comments

[User 169375:]

How can a stock go down in price by 288%???? You can only drop 100%. Get facts right before publishing GARBAGE !!

2008 Jul 23 08:01 AM

[Pilm:]

the author calculated a lagging percent change not a leading percent change

2008 Jul 23 10:01 AM

[StrictNon-C...:]

The creator of such a stupid way of measuring dropping percentage should still be flogged until dead, and all people that use it deserve the same treatment for sheer stupidity and violation of mathematical common sense.

2008 Jul 23 01:46 PM