RIM shares hit a series of multiyear lows after warning on Dec. 15 its new BlackBerry won’t be out until later next year. Its current line isn’t selling well in the U.S., as Apple Inc.’s iPhone and other competitors gobble up market share.

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Relational co-founder Ralph Whitworth, who will take the seat, wants to focus on improving H-P’s discipline on spending, particularly in the area of acquisitions, the people said.

San Diego-based Relational, which had not previously disclosed a position in HP, has approximately a 1 percent stake in the firm that it built after the company announced an acquisition and potential spinoff in August that drew criticisms from analysts and investors, the people said.

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In one memorable episode of the famous old short films “The Little Rascals,” after not getting invited to a party, the Our Gang little dudes decided to form their own group, comically called “The He-Man Woman-Haters Club.”

In other words: No girls allowed!

While it was wink-wink cute when Spanky, Alfalfa and Buckwheat huffed and puffed about keeping out Darla–which they never ever could do–back in the last century, it’s not quite as adorkable when it comes to the boards of all the major Web 2.0 hotshots these days.

That would be Twitter, Facebook, Zynga, Groupon and Foursquare, none of which have any women as directors.

As in zero.

What’s most remarkable is that most of these start-ups are run by what I consider enlightened and open-minded entrepreneurs, mostly young enough to be part of a generation more inclined to value equality and diversity in the workplace.

In addition, each of these companies has a massive base of women consumers, in some cases well over 50 percent of its audience.

Thus, it would seem logical that in casting about for those to help guide these companies, one or two women leaders might slip in.

To be fair, it’s not for lack of trying, but of completion, as was the case with Twitter’s recent addition of three new board members.

They were longtime Silicon Valley exec Peter Currie, Flipboard CEO and co-founder Mike McCue and former DoubleClick leader David Rosenblatt.

All are deeply qualified for the Twitter board, which is obviously prepping for its next stage of growth and maturity.

But in its search, the San Francisco microblogging site did not manage to cast the net quite wide enough.

While sources said at least one prominent online woman exec was considered, there were some legitimate issues with her appointment, and it was not completed.

Still, one might imagine Twitter could have tried harder to find other workable choices.

Currently, the Twitter board is made up of the new trio, as well as Benchmark Capital’s Peter Fenton, Union Square Ventures’ Fred Wilson, Bijan Sabet of Spark Capital, CEO Dick Costolo and co-founders Evan Williams and Jack Dorsey.

Things are not any better over at Facebook, which has several prominent women execs running the show, most especially its high-profile COO Sheryl Sandberg.

But, inexplicably, though she does attend board meetings, she is not yet a director of Facebook, nor is any other woman.

In fact, here is Sandberg on topic at a recent TED event for women, in an eloquent speech titled “Why We Have So Few Women Leaders”:

Instead, the Facebook board is all men, all the time, composed of CEO and co-founder Mark Zuckerberg, prominent techie and venture capitalist Marc Andreessen, investor Peter Thiel, Accel Partners’ Jim Breyer and Washington Post head Don Graham.

It is no better at three of the most prominent recent Web 2.0 start-ups, which one source attributes to the lack of woman VCs, who are often the first board members after major investment rounds.

At Zynga, the hot social gaming company in San Francisco, it continues, with an all-male board, despite a very heavily female audience for its casual social games.

That would be co-founder and CEO Mark Pincus, COO Owen Van Natta, investor Bing Gordon of Kleiner Perkins, investor Reid Hoffman and Brad Feld of the Foundry Group.

The same is true at woman-targeted–spas, spas and more spas–social buying site Groupon, which has an unusually large board for a start-up and made up of–as per usual–all men.

The list: Co-founder and CEO Andrew Mason, Accel Partners’ Kevin Efrusy, former AT&T President and COO John Walter, New Enterprise Associates’ Harry Weller and Peter Barris, former AOL exec Ted Leonsis, 37Signals co-founder Jason Fried and early investors Eric Lefkofsky and Brad Keywell.

And, much smaller, is Foursquare’s board, which is the trio of co-founder and CEO Dennis Crowley, co-founder Naveen Selvadurai and Union Square Ventures’ Albert Wenger.

New investors–Ben Horowitz of Andreessen Horowitz and O’Reilly AlphaTech Ventures’ Bryce Roberts–have observer status and both are, needless to say, dudes.

There is no question it is tough to make sure there is a good balance of qualified women leaders to men in tech–it is an issue we wrestle with every single year for the program of speakers at our own All Things Digital conference, although we are most excellent on this issue on our Web site and conference staff.

But it can be done, especially at public tech companies. Google has two women on its board of nine directors; Yahoo has three of 10; even Oracle has two of a dozen.

But a grand total of zero at the leading companies of Web 2.0 is not just a coincidence.

It’s a shame.

Tomorrow, BoomTown will post a list of great women who would be superb directors for any of these companies, but until then, let’s not follow in Spanky’s steps:

“The Hewlett-Packard board has committed sins over the last 10 years,” the former GE CEO told The Wall Street Journal. “They have not done one of the primary jobs of a board, which is to prepare the next generation of leadership….They end up blowing up the CEOs and don’t have anyone else in mind to come in. Where the hell was the leadership development? Who are these board members?”

Interestingly, Welch (pictured above, measuring his respect for HP’s directors) seems particularly annoyed that HP passed over Todd Bradley, executive VP of the company’s Personal Systems Group and a former GE employee, for the top job. In a second interview with Bloomberg TV, he lambasted HP for hiring yet another outsider as CEO and wondered aloud why the company didn’t just hire Bradley.

“It tells you that they haven’t done the management development job,” he said. “Look, they hired Carly before Mark Hurd, so this is the second time that they’ve had to do that. You know Todd Bradley is out there and Todd Bradley worked for us at GE and Todd Bradley is a very good guy. Somehow or other he wasn’t picked. I don’t know any of the dynamics. So they chose to change the game again. This is their third outside CEO in eight years or something like that. It is obviously a board that isn’t thinking about management succession internally for a long time.”

Asked by the Journal if he knows any HP board members, Welch said, “I wouldn’t admit it if I did.”

Harsh words coming from the guy who was named “Manager of the Century” by Fortune magazine in 1999.

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• Insiders Criticize Ellison For HP CEO Slam

Alan Sklar feels it. The 61-year-old has stood behind the counter of Alan’s Alley Video in Manhattan’s Chelsea neighborhood for 22 years. Revenue is down, and his staff, which reached 10 a few years ago, is now about five. “If we pay the bills we’re happy,” he said.

Many nights, like last Thursday, are very quiet.

He lists the culprits. “Netflix (NFLX), Redbox and on demand,” he said, over Audrey Hepburn’s voice emanating from a television in the corner playing “Funny Face.”

“People like things being given to them. We don’t see as many warm bodies.”

Since the first video-rental shops emerged in the late 1970s, they have served as shrines to films and created new social spaces for neighborhoods, often reflecting their personalities. They drew cinephiles, rebellious teens seeking movies of which their parents might not approve, and budding young actors and directors who canonized them in their work.

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PE Hub’s Connie Loizos seems to think it will and brings up the idea several times in an interview with new CEO Jason Rosenthal:

Q: Ning doesn’t have a single non-executive board member; given how much it has raised, how is that, and why is that?

A: Stay tuned, you’ll be hearing from us and seeing things there in coming weeks and months.

Q: Meaning that you’re raising more money?

A: Mmm, I didn’t say that. We’ve run the company a certain way, with a certain board structure. But one thing you can expect from me is that we’re ready to build a board of directors with outside, independent board directors. That’s one of the first things I’ll be working on.

Q: Are you raising more money soon? It sounds like you are.

A: No comment.

You can parse this many ways if you’d like. On the one hand, it seems pretty clear that Ning is going to bring in some new directors, which doesn’t mean that it’s raising money. On the other hand, if it is definitely not raising more money, then Rosenthal could just say that. I’ve asked Ning for any clarification it can provide.

But read the whole interview for yourself. There’s a bunch of good stuff. For instance: Rosenthal, without saying so, makes it clear that the company was happy to see SVP of engineering Jay Parikh leave last fall.

And he says that Ning is finally ready to move on from its dependence on Google (GOOG) AdSense. But that will take a while–the company only began building an ad sales team this year.

This past July, Google CEO Eric Schmidt left Apple’s board presumably for the same reason. The cozy relationship between the companies, which increasingly compete in the cellphone and operating systems markets, had led the FTC to question whether close ties between their boards of directors violate antitrust laws. With Schmidt gone from Apple’s board room and Levinson gone from Google’s, it would seem there’s no longer reason for the FTC to do so.

“Art has been a key part of Google’s success these past five years, offering unvarnished advice and vital counsel on every big issue and opportunity Google has faced,” Schmidt said in a statement. “Though he leaves as a member of our Board, Art will always have a special place at Google.”

Though not nearly as special as his place at Apple, where his remaining board seat and true allegiances clearly lie.

UPDATE:Levinson’s resignation from Apple’s board appears to have appeased the FTC. “Google, Apple, and Mr. Levinson should be commended for recognizing that overlapping board members between competing companies raise serious antitrust issues and for their willingness to resolve our concerns without the need for litigation,” FTC chairman Jon Leibowitz said in a statement. “Beyond this matter, we will continue to monitor companies that share board members and take enforcement actions where appropriate.”

Quite a coup for HP. Andreesen–who co-authored Mosaic, the browser that popularized the World Wide Web–is an icon in Silicon Valley and his expertise is highly sought. In addition to helming his new venture capital firm, Andreessen-Horowitz, Andreesen also serves as chairman of social networking outfit Ning and sits on the boards of eBay (EBAY) and Facebook. HP (HPQ) is lucky to get him, if only because it seems unfathomable that he’d have the time or bandwidth for anything else.

“Marc Andreessen is a software pioneer whose leadership has helped shape the Internet,” an ebullient HP CEO Mark Hurd said in a statement. “Marc’s entrepreneurial background and industry expertise will be a welcome addition to the HP board of directors.”

In a statement issued this afternoon, the FTC applauded the move, but said the two companies are foolish if they think it will simply abandon its inquiry as a result.

“We have been investigating the Google/Apple interlocking directorates issue for some time and commend them for recognizing that sharing directors raises competitive issues, as Google and Apple increasingly compete with each other,” said Bureau of Competition Director Richard Feinstein. “We will continue to investigate remaining interlocking directorates between the companies.”

In other words, Schmidt’s departure was a nice start, but the Commission still worries that Google (GOOG) director Arthur Levinson’s presence on Apple’s (AAPL) board–as well as that of Google advisers Bill Campbell and Al Gore–might lead to conflicts of interest or unfair business practices.

So who’ll be the next to leave: Levinson or Gore?

People familiar with the matter tell Bloomberg that Apple’s handling of the matter remains under scrutiny and that company directors Art Levinson and Bill Campbell had been briefed by Jobs’s doctors on his medical condition at the time of the January disclosures, but little else.

Now, the path from “Steve is suffering from a common bug” to “a hormone imbalance has been robbing Steve of the proteins his body needs to be healthy” to “Steve has undergone a liver transplant” is obviously something of an eyebrow-raiser. But whether it was material to Apple’s business and therefore required disclosure isn’t clear. After all, Apple (AAPL) did just fine while Jobs was on sabbatical; the debut of new Macs, iPods and iPhones is testament to that. Beyond that, there’s this: Apple’s stock posted a 59 percent gain while he was away.

“The issue is not going to be whether they needed to disclose the medical records,” James Cox, a securities law professor at Duke University, told Bloomberg. “It’s going to be whether they monitored the disclosures about his health, in relation to investor expectations that Apple would continue to be led by Steven Jobs….[Apple] did fine. Do you need to say more than, ‘Our CEO has health problems and he’s out on leave?’ The question I think the SEC is looking at is whether it’s material.”

People familiar with the matter tell Bloomberg that Apple’s handling of the matter remains under scrutiny and that company directors Art Levinson and Bill Campbell had been briefed by Jobs’s doctors on his medical condition at the time of the January disclosures, but little else.

Now, the path from “Steve is suffering from a common bug” to “a hormone imbalance has been robbing Steve of the proteins his body needs to be healthy” to “Steve has undergone a liver transplant” is obviously something of an eyebrow-raiser. But whether it was material to Apple’s business and therefore required disclosure isn’t clear. After all, Apple (AAPL) did just fine while Jobs was on sabbatical; the debut of new Macs, iPods and iPhones is testament to that. Beyond that, there’s this: Apple’s stock posted a 59 percent gain while he was away.

“The issue is not going to be whether they needed to disclose the medical records,” James Cox, a securities law professor at Duke University, told Bloomberg. “It’s going to be whether they monitored the disclosures about his health, in relation to investor expectations that Apple would continue to be led by Steven Jobs….[Apple] did fine. Do you need to say more than, ‘Our CEO has health problems and he’s out on leave?’ The question I think the SEC is looking at is whether it’s material.”

A report in the Times of London in which Microsoft would buy Yahoo’s search business in a convoluted $20 billion deal that would include well-known Internet execs Jon Miller and Ross Levinsohn, is–in the words of one key player–”total fiction.”

Actually, that’s Levinsohn speaking, on the record. But that’s also the essential word from all key players regarding the Times’s report.

BoomTown has spoken to top sources at Yahoo (YHOO) and Microsoft (MSFT) too and all scoff at such a deal now taking place or that either side has been in any such discussions of late.

Yahoo’s entire market cap, in fact, is only $16 billion.

Rumors of Microsoft buying all of Yahoo have popped up regularly since it abandoned its failed takeover bid, all of which have been untrue.

That’s not to say there will not be some search deal between Yahoo and Microsoft, which seems more than likely at some point.

It makes sense on many levels and is supported by Carl Icahn, the Yahoo board member who upped his money-losing stake in the company last week.

That stock purchase should be enough of a reason for there to be no Microsoft-Yahoo search deal imminent, given Icahn would be more than well aware of it and buying up almost seven million Yahoo shares–now at historic lows–only days ago would smack of insider trading.

Still, the report in the Times has an unusual level of detail, involving Microsoft giving large gobs of money to Levinsohn and Miller.

Wrote the Times:

Under the terms of the proposed transaction, Microsoft would provide a $5 billion facility to the Miller and Levinsohn management team. The duo would raise an additional $5 billion from external investors.

This cash would be used to buy convertible preference shares and warrants which would give it a holding in excess of 30% of Yahoo.

The external investors would also have the right to appoint three of Yahoo’s 11 board directors. The talks with Yahoo involve Microsoft obtaining a 10-year operating agreement to manage the search business. It would also receive a two-year call option to buy the search business for $20 billion. That would leave Yahoo to run its own e-mail, messaging, and content services.”

Sounds good, except it’s the first time Levinsohn has heard of the plan, he said. Sources at Microsoft and Yahoo also said there was no deal like that in the making at this point in time.

Earlier this year, there was also another deal involving Icahn, before he gave up his proxy fight against Yahoo in exchange for a board seat, which did involve Levinsohn and Miller taking over Yahoo.

But, as has happened to many schemes involving Yahoo, it never came to pass.

Interestingly, there was also a similar investment deal as the one described in the Times, many months ago, just after Microsoft had walked away from its takeover battle for Yahoo.

It involved a very complex transaction involving Microsoft buying a large stake in Yahoo shares, running Yahoo’s search business for a time period and giving Yahoo a huge guaranteed revenue stream.

But that deal had already been spurned by Yahoo for the search-ad deal with Google (GOOG), which collapsed recently under intense regulatory scrutiny.

That has focused a lot of attention back on a possible deal between Yahoo and Microsoft, the No. 2 and No. 3 players in search, both of which have been chasing Google without any success.

Microsoft, despite spending billions, has been lagging badly behind Yahoo, which has more than doubled its share.

And that is precisely why it has long been interested in acquiring Yahoo’s search business.

Microsoft CEO Steve Ballmer has said the software giant is not interested in buying Yahoo many, many times, although he has not ruled out a search deal of some sort.

But Microsoft, many sources said, has been waiting for Yahoo to get another CEO in place, after Yahoo CEO Jerry Yang recently said he was stepping down to make way for a new leader.

Yahoo has also said in recent days that it is not currently engaged in any kind of talks with Microsoft, even about a more likely search deal.

At least in this chapter of the drama that has engulfed Yahoo over the last year, believe them.

[Full disclosure, though run separately, The Times of London is owned by News Corp. which also owns this Web site.]

Kumar alleges they were all aware of the infamous “35-day month” ploy for which he and eight other former CA (CA) officials took the fall. “Wang was not only aware of the accounting improprieties, such as the 35-Day Month, he also actively participated in concealing those improper accounting practices. … Wang knew that CA’s quarters were ‘open’ for five days into the next month per his directive, and he sometimes instructed CA to keep CA’s books ‘open’ after the usual ‘five days’ to execute license agreements and recognize revenue from those agreements in the previously ended quarters.”

Damning allegations and ones Wang, D’Amato, et al., vigorously deny.
Said a spokesman for Ranieri and D’Amato: “[Kumar] from jail continues to be a stranger to the truth.”

In a brief interview with Reuters, Icahn seemed oddly reserved for someone who, up until last week, had always been ready with an unkind word and an outstretched middle finger for Yahoo and its fumbling leadership. Apparently, holding 59 million shares in a company that’s somehow managed to undermine a merger deal with Microsoft (MSFT) that would have valued it at up to $47.5 billion has taken some of the spring out of his step. “While the Google deal is not the same as an offer of $34.375 per share for Yahoo, I am continuing to study it, and it might have some merit,” Icahn said. “I continue to be extremely disappointed with the Yahoo management, but the Google deal might have some merit and seems to be better than the alternative deal proposed by Microsoft.”

Icahn offered no comment on the future of his proxy fight for the company’s board, though one would imagine he must be having some second thoughts about it now that Microsoft has thrown up its hands in disgust and has apparently walked away from the negotiating table for good. And the “change of control” provisions that allow Google or Yahoo to terminate the partnership they’ve just inked in the event that a majority of Yahoo’s board is replaced at its upcoming annual shareholders meeting in August can’t be sitting well with him either.

But not to worry, dissident Yahoo investor Eric Jackson has a plan that may right the company and prevent its current proprietors from driving down its value once again. He’s urging fellow shareholders to vote for a board slate that includes four directors proposed by fellow activist Carl Icahn and five from Yahoo. “I want Icahn to win outright, but I am putting forward this ‘third option’ because I fear several large investors will worry about the operational abilities of Icahn and his team,” Jackson wrote in an essay entitled “Third Option for Yahoo.”

So who would Jackson like to see elected to Yahoo’s board? From Icahn’s slate he recommends Adam Dell, Lucian Bebchuk, John Chapple and Edward Meyer. And from Yahoo’s existing board Vyomesh Joshi, Robert Kotick, Maggie Wilderotter, Gary Wilson and Jerry Yang.

Jerry Yang? Really?

“Although I have been disappointed with the results of Jerry Yang’s tenure as CEO and hold him accountable for the poor outcome with Microsoft, I believe that–as a co-founder–he should remain on this board,” Jackson explained. “Whether or not he remains as CEO is something for the new board to determine. I frankly hold Mr. Bostock [Yahoo Chairman Roy Bostock] more responsible for the breakdown in talks with Microsoft. He supposedly has much more experience in such deal-making matters than Yang, and I find it puzzling that he would choose not to attend that fateful May 3 meeting in Seattle, which led to Microsoft finally pulling the plug on their offer.”

In a brief interview with Reuters, Icahn seemed oddly reserved for someone who, up until last week, had always been ready with an unkind word and an outstretched middle finger for Yahoo and its fumbling leadership. Apparently, holding 59 million shares in a company that’s somehow managed to undermine a merger deal with Microsoft (MSFT) that would have valued it at up to $47.5 billion has taken some of the spring out of his step. “While the Google deal is not the same as an offer of $34.375 per share for Yahoo, I am continuing to study it, and it might have some merit,” Icahn said. “I continue to be extremely disappointed with the Yahoo management, but the Google deal might have some merit and seems to be better than the alternative deal proposed by Microsoft.”

Icahn offered no comment on the future of his proxy fight for the company’s board, though one would imagine he must be having some second thoughts about it now that Microsoft has thrown up its hands in disgust and has apparently walked away from the negotiating table for good. And the “change of control” provisions that allow Google or Yahoo to terminate the partnership they’ve just inked in the event that a majority of Yahoo’s board is replaced at its upcoming annual shareholders meeting in August can’t be sitting well with him either.

But not to worry, dissident Yahoo investor Eric Jackson has a plan that may right the company and prevent its current proprietors from driving down its value once again. He’s urging fellow shareholders to vote for a board slate that includes four directors proposed by fellow activist Carl Icahn and five from Yahoo. “I want Icahn to win outright, but I am putting forward this ‘third option’ because I fear several large investors will worry about the operational abilities of Icahn and his team,” Jackson wrote in an essay entitled “Third Option for Yahoo.”

So who would Jackson like to see elected to Yahoo’s board? From Icahn’s slate he recommends Adam Dell, Lucian Bebchuk, John Chapple and Edward Meyer. And from Yahoo’s existing board Vyomesh Joshi, Robert Kotick, Maggie Wilderotter, Gary Wilson and Jerry Yang.

Jerry Yang? Really?

“Although I have been disappointed with the results of Jerry Yang’s tenure as CEO and hold him accountable for the poor outcome with Microsoft, I believe that–as a co-founder–he should remain on this board,” Jackson explained. “Whether or not he remains as CEO is something for the new board to determine. I frankly hold Mr. Bostock [Yahoo Chairman Roy Bostock] more responsible for the breakdown in talks with Microsoft. He supposedly has much more experience in such deal-making matters than Yang, and I find it puzzling that he would choose not to attend that fateful May 3 meeting in Seattle, which led to Microsoft finally pulling the plug on their offer.”

After publicly cataloguing Yahoo’s (YHOO) failures of leadership for the better part of the week, he seems to have fallen silent after what may prove to be the company’s greatest failure of all.

Perhaps that’s because he’s still hard at work penning a letter so full of spleen and vitriol it will melt Jerry Yang’s head like Belloq’s in “Raiders of the Lost Ark.”

Or perhaps it’s because he’s not that worried about the Google (GOOG) deal. After all, it’s got all sorts of things going against it. There’s antitrust scrutiny. And then there are its terms. According the deal’s fine print, Google is free to scuttle the agreement in the event of a “change in control.” And that includes changes of control in the boardroom–exactly the sort of thing Carl Icahn proposes.

The services agreement also permits Google to suspend performance of the services under certain circumstances, including a … change in a majority of the board of directors of Yahoo following an annual or special meeting of stockholders if a majority of the new directors did not serve on Yahoo’s board immediately prior to such stockholder meeting and were nominated or solicited for by Microsoft, Time Warner or News Corp. or, solely with respect to Yahoo’s first two annual or special meetings held after the effective date where the election of a majority of directors is before Yahoo stockholders (but not later than Sept. 1, 2009), by any other person or group.”

Meanwhile, Yahoo and Google (GOOG) moved to complete a search-ad deal.

Dueling statements from Yahoo and Microsoft on the conclusion of their negotiations below. (Carl Icahn’s outraged letter on the whole matter presumably forthcoming…)

Yahoo Announces Microsoft Talks Have Concluded

Yahoo, a leading global Internet company, today announced that discussions with Microsoft regarding a potential transaction–whether for an acquisition of all of Yahoo or a partial acquisition–have concluded. The conclusion of discussions follows numerous meetings and conversations with Microsoft regarding a number of transaction alternatives, including a meeting between Yahoo and Microsoft on June 8 in which Chairman Roy Bostock and other independent board members from Yahoo participated. At that meeting, Microsoft representatives stated unequivocally that Microsoft is not interested in pursuing an acquisition of all of Yahoo, even at the price range it had previously suggested.

With respect to an acquisition of Yahoo’s search business alone that Microsoft had proposed, Yahoo’s board of directors has determined, after careful evaluation, that such a transaction would not be consistent with the company’s view of the converging search and display marketplaces, would leave the company without an independent search business that it views as critical to its strategic future and would not be in the best interests of Yahoo stockholders.

Yahoo remains focused on maximizing value for stockholders by continuing to execute on its strategy of being the ‘starting point’ for the most consumers on the Internet and a ‘must buy’ for advertisers. The online-advertising industry is projected to grow from $40 billion in 2007 to approximately $75 billion in 2010, and the company believes it has the right assets, strategic plan, board of directors and management team to capitalize on this growth opportunity.”

Microsoft Issues Statement Regarding Yahoo

In the weeks since Microsoft withdrew its offer to acquire Yahoo, the two companies have continued to discuss an alternative transaction that Microsoft believes would have delivered in excess of $33 per share to the Yahoo shareholders. This partnership would ensure healthy competition in the marketplace, providing greater choice and innovation for advertisers, publishers and consumers.

As stated on May 3 and reiterated on May 18, Microsoft was not interested in rebidding for all of Yahoo. Our alternative transaction remains available for discussion.”

“Until now I naively believed that self-destructive doomsday machines were fictional devices found only in James Bond movies,” Icahn wrote, referring to Yahoo’s highly unusual severance plan that would have rewarded employees who left the company after a change in ownership. “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.”

Doomsday machines? James Bond movies? Did Yahoo appoint Richard Kiel to its board and not tell anyone?

Oh, and by the way, the name’s Icahn … Carl Icahn.

His letter follows.

Dear Mr. Bostock:

I have long been cynical about the effectiveness of many of the boards and CEOs in this country and as a result the inability of our companies to compete. I have constantly complained about how far CEOs and boards will go in order to retain their jobs, yet even I am amazed at the length Jerry Yang and the Yahoo board have gone to in order to entrench their positions and keep shareholders from deciding if they wished to sell to Microsoft.

According to details in a complaint that I became aware of yesterday (details Yahoo fought to keep under seal), Jerry Yang and a majority of the board went to inordinate lengths to sabotage a Microsoft bid. The complaint states: “Viewing employee retention as Microsoft’s Achilles heel, Yang engineered an ingenious defense creating huge incentives for a massive employee walkout in the aftermath of a change in control. The plan gives each of Yahoo’s 14,000 full-time employees the right to quit his or her job and pocket generous termination benefits at any time during the two years following a takeover, by claiming a ‘substantive adverse alteration’ in job duties or responsibilities.” The damage to Microsoft “is compounded by the fact that Yahoo’s thousands of engineers, known as ‘Technical Yahoos!,’ have detailed job responsibilities and qualifications.”

Most importantly, 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.

It is insulting to shareholders that Yahoo for the last month has told us that they are quite willing to negotiate a sale of the company to Microsoft and cannot understand why Microsoft has walked away. However, the board conveniently neglected to inform shareholders about the magnitude of the plan it installed which made it practically impossible for Microsoft to stay at the bargaining table. Could this have been the problem?

Even more deceitful are Yahoo’s actions toward its own employees, for whom you claimed to have set up the “plan”. Management neglected to mention to these same employees that Microsoft in its proposals had earmarked $1.5 billion of retention incentives (representing over $100,000 per employee) meant to allay any employee concerns.

Ironically, according to the complaint, this is not the first time that Yahoo has denied shareholders the opportunity of selling to Microsoft at a large premium. According to the complaint, in January 2007 Microsoft offered to purchase Yahoo at $40 per share but the company rejected that proposal. On January 31, 2008, Steve Ballmer emailed a letter to Jerry Yang and Roy Bostock making a new proposal of $31 per share. The letter recounts Microsoft’s prior efforts to acquire Yahoo and noted that Microsoft had given Yahoo time to implement business strategies designed to turn the company around. These strategies obviously didn’t work. The letter went on to state: “Our proposal represents a 62% premium above the closing price of Yahoo! common stock of $19.18 on January 31, 2008.” Yahoo not only turned down this proposal but sabotaged it. An article in CNET News cited in the complaint sums it up by stating, “Yahoo may indeed agree to Microsoft’s [offer], but it will be over Jerry Yang’s dead body”.

I and many of your shareholders believe that the only way to salvage Yahoo in the long if not short run is to merge with Microsoft. However, because of HSR considerations, to complete a merger of this magnitude will take a period of time. Even if by some stretch of the imagination the Yahoo board finally determines to do the rational thing and sell the company, I fear that, in light of Yang and the board’s recent actions in response to Microsoft’s overtures, it may be too late to convince Microsoft to trust Yang and the current board to run the company during that period while Microsoft sits on the sidelines with $45 billion at risk. Therefore, the best chance to bring Microsoft and Yahoo together is to replace Yang and the current Yahoo board with a board that will negotiate in good faith with Microsoft and in whom Microsoft will have trust to operate the company during the long period between signing and closing.

You stated in a press release yesterday that, “Yahoo’s board of directors including Jerry Yang has been crystal clear that it would consider any proposal by Microsoft that was in the best interests of its shareholders.” However this is not crystal clear to me. You have allegedly turned down a $40 offer. You have turned down and sabotaged a $33 offer. Instead, you appear willing to negotiate an “alternative” deal that in my opinion will be worth less than $33 but will entrench the board and Jerry Yang. I understand how these actions are in the best interests of management and a board whose members each receive $40,000 per month for several days work, but it is hard for me to understand how these actions are in the “best interests of the shareholders.”

However, despite your actions to date, there is still some possibility that you can resuscitate a Microsoft offer for the company. The board can rescind the “severance plan” that is the largest impediment to a Microsoft deal. You currently can do this because Microsoft withdrew their bid 30 days ago. It is time for you to stop misleading your shareholders with respect to Microsoft. It has been reported today that when asked to talk about the Microsoft bid, Sue Decker indicated that Microsoft made an offer which Yahoo’s board didn’t feel was at an attractive enough price. However, one doesn’t have to be a rocket scientist to realize there is a simple method to possibly achieve a higher price. Simply rescind the poison pill “severance plan”, which would free up approximately $2.4 billion and possibly even more which could be added to the bid. It is also time to admit to your shareholders that the severance plan was not done for your employees (who you conveniently neglected to inform that Microsoft had earmarked $1.5 billion in retention incentives for), but rather was done simply as an entrenchment device and to impede a Microsoft bid. If you are not completely disingenuous in your protestations concerning doing “the right thing” for shareholders, you should rescind the severance plan expeditiously and determine if Microsoft is still willing to purchase our company and thereby create a true competitor for Google. I can only hope that you will finally do what is in the “best interests of the shareholders.”

Sincerely yours,

CARL C. ICAHN

But that’s just a sidenote to the larger issues in the suit, which charges Yahoo’s directors with breach of fiduciary duty for not just rejecting Microsoft’s proposed deal, but also for going to great lengths to make it an unappealing acquisition target. “Due to their personal interests in maintaining Yahoo’s independence and their strong antipathy to Microsoft, [Yahoo co-founders Jerry Yang and David Filo] failed to consider and respond in good faith to the acquisition offers by Microsoft to the detriment of Yahoo and its shareholders,” the complaint argues. The two “used the threat of pursuing measures that make Yahoo an unattractive acquisition target, including the prospect of Yahoo abandoning its long-term business strategy in favor of a tie-up with Google that would make a Microsoft acquisition a regulatory and litigation quagmire, as an improper means to thwart Microsoft’s advances.” Moreover, “Yang convinced the board to adopt change-in-control employee severance plans that impose tremendous costs and risk for an acquirer, throwing sand in the gears of Microsoft’s plans for a smooth integration. These highly unusual plans reward employees with rich benefits if they quit and claim a constructive termination in the aftermath of a change in control.”

The plans at issue here, which would have cost Yahoo $1.5 billion, provided 100% equity acceleration for all employees. It is “a bizarre outcome if people who stick around make off worse financially than people who are laid off,” one Yahoo VP said of the plan. The company’s compensation consultant had a better word for it: “nuts.”

What was it Yang said during his interview at D6 last week? “I will probably never be a CEO again?“

Hey, he said it, not I.

Anyway, here it is in all its keep-your-head- in-the-sand glory.

yahoos,

today carl icahn announced his intent to nominate a slate of 10 directors to take control of our board of directors at this year’s annual meeting. we sent him a letter in response, which we made public in a press release. i’m attaching a copy of that press release, including the full text of our letter, and you should read it carefully.

we always want to hear the views of our stockholders, but you should know that mr. icahn’s letter reflects a significant misunderstanding of the facts about the microsoft proposal and the diligence with which our board evaluated and responded to that proposal. we believe our board has the independence, knowledge, experience and commitment to maximize value for all of our stockholders. yahoo is a great company with a truly unique set of highly valuable assets that is growing, profitable and executing well on its strategic plan to enhance our leadership position in online advertising. our solid results for the first quarter of 2008 are a testament to this.

today’s events will undoubtedly draw a lot of media attention and there will be lots of speculation about what happens next for yahoo. i ask all of you to put aside the rumors and speculation and stay focused on the business at hand and what we do best — transforming the online experiences of our users, advertisers, publishers and developers.

i know you all have a lot of questions and so i’ve also attached some faqs that will address some of your questions. as we’ve said before we’ll do our best to continue to update you as new information becomes available. thank you again for your continued hard work as we work together to make yahoo a stronger leader in the online marketplace and an even better company.

jerry

FAQ

Can stockholders nominate directors to the board?
Stockholders, as equity owners of the Company, have the ability to nominate one or more directors for election to a board at the Company’s annual meeting as long as they comply with the requirements contained in our bylaws. Under our bylaws, today was the last day that a stockholder could nominate a candidate for director.

How long will all this take?

We can’t speculate on how events will develop at this time, but we plan to hold our annual meeting in a couple of months. I’d ask all of you to stay focused on the business at hand and what we do best — transforming the experiences of our users, advertisers, publishers and developers, all while enhancing our leadership position in the online marketplace.

What’s our next step?
We will file preliminary proxy materials with the SEC that will describe the matters to be voted on, including the Company’s nominees for election to the board, and the board’s recommendation. Once those materials are cleared by the SEC, we will mail them to our stockholders.

In the meantime, we should remain focused on doing what we do best — transforming the experiences of our users, advertisers, publishers and developers, all while enhancing our leadership position in the online marketplace.

We will continue to update you as information becomes available but please remember that we are subject to various legal restrictions on what we can say and when we can say it.

What can employees do?
We ask you to continue to put aside all rumors and speculation you may be hearing. None of us should allow external reports to shift our focus away from doing what we do best — transforming the experiences of our users, advertisers, publishers and developers, all while enhancing our leadership position in the online marketplace.

In another micro-move in the fight between activist shareholders and CNET, the Delaware Supreme Court has given the thumbs-up to a lower court ruling that the Jana Partners group can nominate a slate of directors to the board of the San Francisco-based tech news and reviews site.

CNET (CNET) has been fighting these efforts by Jana–along with Sandell Asset Management, Alex Interactive Media, Spark Capital and Velocity Interactive Group–to nominate two directors and expand the board and add more of their own nominees–claiming it was contrary to its bylaws.

Apparently not!

What does this mean? Of course, that’s not clear at all, since Jana cannot force other shareholders to help them get what they want.

In fact, some other CNET shareholders I have queried recently seem nonplussed by either side in the fight over the future direction of CNET.

But while the mano-a-mano between the pair is certainly not as fast-moving as the Yahoo-Microsoft-and-now-Carl Icahn! mess, it has had some action.

On April 1, for example, Jana issued a testy report about the company, noting:

“CNET’s current leadership now claims it can reverse course and begin creating shareholder value, but we believe they have offered no evidence that they can do so. Despite years of shareholder value destruction, CNET’s leadership during this time failed to act on the urgent need to make fundamental strategic and operational change, instead pursuing a failed expansion strategy even as CNET fell further behind. CNET’s leadership did not even start examining the basics of improving performance until we called for change, both publicly and directly with CNET’s Board of Directors.”

CNET, natch, disagreed: “CNET Networks added that while it welcomes the views of its stockholders, after a preliminary review, the white paper contains numerous misstatements and is misleading in many respects. The Company will respond in due course.”

Of course, BoomTown is poised to head over to CNET’s Second Street HQ to video-query CEO Neil Ashe tout de suite.

Neil, we’re waiting by the phone!