Doing the Math: Who Won in the Yahoo-Icahn Truce?
A source close to Yahoo’s thinking emailed and declared that BoomTown was misinformed and ignorant of the insider mechanics of the high-level corporate wrangling when I suggested in a post earlier today that the settlement between Yahoo and Carl Icahn was perhaps not the time to break out the bubbly.
You know, because Yahoo’s (YHOO) stock is still moribund, morale is still low, Microsoft (MSFT) is still looming and the economy is still tanking.
Other than that, Yahoo sources wanted to let me know the Icahn truce was a win.
And that is absolutely true, technically speaking.
One source told me, for example, that Icahn was going to go to a short slate (four of nine), and once he went to a short slate, it was highly possible that shareholders would have put on a few members of his choice anyway.
In other words, if I can manage the onerous math involved: Three or four of nine board seats Icahn might have gotten if the proxy fight went forward would have been a lot worse than three of 11 seats that the activist investor actually got in the deal.
Plus, added another source, Yahoo has consent over two of Icahn’s board choices, one of which will likely be former AOL (TWX) head Jon Miller, an experienced Web exec who is favorably looked upon by Yahoo CEO Jerry Yang.
Yahoo certainly had the wind at its back after Legg Mason Capital Management’s (LM) Blll Miller said he was backing current management last week, so Icahn probably blinked and took a bird in the hand now.
As to Yahoo, cashing in now rather than gambling makes sense. I see exactly why the company made this move–it ensured a certain outcome, as annoying as it doubtlessly is to have to seat Icahn at Yahoo’s board table.
(Also, who gets to sit next to him? I vote for the always jovial Eric Hippeau!)
So, cashing in now and avoiding a fight makes sense for both sides, I hereby admit.
Except, well, that the man that Yahoo quite correctly was characterizing as a technology nincompoop just days ago will be sitting on its board.
Icahn is still not qualified to be on the board and will also probably be an unhelpful, disruptive influence.
In addition, while three out of 11 is better than three or four out of nine, Yahoo might have done better in the proxy fight.
More importantly, in fighting, Yahoo leadership would have shown it was resisting the snake oil solutions that Icahn has been peddling, which essentially boils down to selling all or part of Yahoo off to Microsoft so that Icahn can get back his underwater investment.
Doing a deal with Microsoft might be a good idea, actually, but Yahoo has not been able to make a truly rational decision about what its focus should be, due to all the noise and pressure and, yes, the press scrutiny, of every one of its moves.
Now with Icahn, who can be very persuasive, incessantly poking away from within, I think he will probably not let up and definitely not be the kind of influence Yahoo needs.
Given my math-impaired mind, I could be wrong, of course.
With fewer seats going to its nemesis, Yahoo is right when it says that Icahn, who was inevitable, will not be as much of a drag as he could have been. Unfortunately, he will still be a drag, however.