Last Updated Jun 5, 2008 4:15 PM EDT
Anyone else sick of this dueling letter thing?
As a brief catch-up. Carl Icahn blasted Yahoo's board on Wednesday reiterating what he told CNBC a day earlier. Here's a snippet of Icahn's letter, which is based on a class action complaint against Yahoo recently made public.
Microsoft might never be able to trust a CEO and board who, while claiming to be negotiating in good faith, went behind their back and adopted a "plan" which not only sabotages any Microsoft acquisition but went so far as to completely disable its own ability to rescind the "plan" as long as Microsoft's offer remains pending. Until now I naively believed that self-destructive doomsday machines were fictional devices found only in James Bond movies. I never believed that anyone would actually create and activate one in real life. I guess I never knew about Yang and the Yahoo Board. In my opinion, it will be extremely difficult for Microsoft or other companies to trust, work with and negotiate with a company that would go to these lengths.Yang responds:
Your letter seriously misrepresents and manipulates the facts regarding the recent events pertaining to Microsoft and Yahoo!. You rely on, as "facts," a series of unsubstantiated allegations from a complaint filed in a Delaware court which grossly misstate the very clear record and position established by the Yahoo! Board. Let me elaborate: You make reference to our employee retention plan but you significantly mischaracterize its purpose and its effect. In fact, you refer to it as a "Poison Pill" which could not be further from the truth. To set the record straight, the employee retention program is designed to protect the Company's assets and value during a time of uncertainty. The claim that the plan gives each of Yahoo!'s employees "the right to quit his or her job and pocket generous termination benefits at any time during the two years following a takeover--" is just plain wrong. In fact, our plan has a "double trigger" which means that in order for an employee to be eligible for benefits under our plan, there would need to be a change of control AND the employee would need to be terminated "Without Cause" or resign for "Good Reason." That means that in contrast to your assertions, an employee who simply quits his or her job would receive nothing under our plan.And it goes on an on. There's a nice little conversation about Yang and Yahoo on the Enterprise Irregulars email list. The short version: Vinnie Mirchandani argues that Yang should tell Icahn to pound sand. Yahoo shareholders (and more than a few casual observers) argue that Yang did a disservice to shareholders (that's the mild version). What it really comes down to is time horizonâ€"how long are you willing to wait to see if Yang can reinvigorate Yahoo when you could have had at least $31 a share?
It's an interesting question. After all, Apple, HP and IBM were all also-rans at one point. Apple was the most dramatic example of a turnaround. A shareholder's choicesâ€"as we careen toward an Aug. 1 proxy warâ€"are clear:
- Saddle up with Yang hell or high water and bet that Yahoo will be a top dog again.
- Boot the board and align with a guy (Icahn) that will sell the company in a heartbeat (assuming Microsoft will still take it) and probably doesn't have a time horizon beyond 2008.
- Be wary of the opportunity costs involved, take the money you have in Yahoo and find a new opportunity.
- Stay on the sidelines and enjoy the show.