Last Updated Jul 21, 2008 11:48 AM EDT
Why didn't everyone just sit down and agree to share in the first place -- you know, the way you learned in kindergarten? It's simple: They all wanted to win decisively. This is a case where, no matter what anyone says, you can cynically guess that they aren't being straight. Jerry Yang wanted to stay in control and prove that he wasn't a managerial screw-up, no matter how much he talked about the interests of the investors. (Had he really believed in that, he might have accepted the $43 billion when Microsoft offered it.)
The board gets expanded from nine to 11 members. Icahn and two others of his choice get seats. However, this is hardly the end of the story, because it sets the stage for the fight that will go on inside the company.
Yang can hardly claim victory because Icahn didn't really care whether Yang stayed as CEO or not so long as there was plenty of money from a deal with someone-- anyone. The pressure only increases on the current board, because all the heavyweight investors, including Legg Mason, have clearly indicated that they are unhappy with how management and the board have treated investor financial interest. Icahn now has a bloc to push for either a complete sale or divestiture of assets, like the search division, and the board cannot so easily ignore him. And it's hard to imagine that Icahn has had the success in business he's shown without some powerful persuasive talents at his command.
Microsoft knows the pressure and can more easily negotiate while lowering its costs, and the current board will probably gravely announce how it "succeeded" in maximizing shareholder interests -- otherwise known as making up at least a portion of the tremendous damage that happened under its watch -- and Yang can get quietly moved out, spending some of his fortune investing in companies, acting as a director on a few boards, and otherwise trying to forget how ignoble his exit was.