Jerry wrote: yahoos,

it’s time for another update.

Translation: Yep! Still no adult punctuation! We might continue to face serious big-boy issues at the company, but we refuse to give in on our insistence on kindergarten spelling patterns.

In that vein, would you like a nice cold glass of chocolate milk before I get to the bad news?

Jerry wrote: as a company, we’ve made some great progress this year. while it hasn’t been easy, especially in light of the challenges we’ve faced (not to mention the current downturn in the macro economic environment), we’ve accomplished a tremendous amount and we’re all working hard to continue executing on the company’s strategic plan.

Translation: As a company, we have managed to avoid disaster more times that Serena and Dan have broken up and reunited on one episode of “Gossip Girl.”

We’re foiled Steve Ballmer of Microsoft (MSFT)! We’ve co-opted shareholder activist Carl Icahn! We’ve pissed off investors like Gordon Crawford!

Much like Serena and Dan, who are arguably a lot sexier to watch in their state of complete plot paralysis, that all this has moved Yahoo (YHOO) precisely zero feet forward in terms of true changes at the company does not matter.

Jerry wrote: as we look ahead and to position us for success in 2009, we’re continuing the work already underway to get fit as an organization: actively looking for ways to make process and structural changes to our business that will allow us to work more efficiently, with more scale. we’ve enlisted the help of Bain & Co. to work with the leadership team on identifying ways to leverage our strengths, and to improve and accelerate our performance. we all know and experience parts of yahoo! where we can do better and be more agile in a competitive marketplace. this is consistent with what you told us in the YEES survey conducted in may–we need to find easier ways to work within yahoo!, and more importantly, create an even better experience for our customers and users.

Translation: Here come the weasel management consultants!

By saying “actively looking for ways to make process and structural changes to our business that will allow us to work more efficiently,” we actually mean layoffs.

By “identifying ways to leverage our strengths, and to improve and accelerate our performance,” we actually mean learning how to make layoffs.

By “we need to find easier ways to work within yahoo!,” we actually mean having the weasels, oops, Bain, tell us the best way to get rid of people via … layoffs!

Jerry wrote: each one of us will play an important role in this process. in the coming weeks, we’ll be soliciting your input and feedback. i want to know how we can improve the way we work with each other, and the way others work with yahoo!.

Translation: While the famous “Peanut Butter Manifesto” by Brad Garlinghouse (who laid himself off!) outlined all this and more years and years ago, we’d like you to tell us the best way to fix what’s broken, even though that has been, well, the presumable job of management.

Also, if you have any thoughts on who we should lay off, please do not hesitate to put your suggestions in the purple boxes we have placed strategically throughout the campus (and stuffing ballots with my name on them will not count!).

Jerry wrote: i know that yahoo! can benefit greatly from more discipline among all departments and functions, across the company. longer term, getting fit now will enable us to be more successful moving forward.

Translation: Discipline = layoffs. Getting fit = layoffs. But just think how lean and trim we’ll look when it is all over!

Jerry wrote: thanks,

jerry

Translation: Thanks and please don’t forget to take your complimentary purple Yahoo cozy on the way out! (The Bain people said it would be a nice touch.)

And, as an added plus, here is a decoding of the fully-punctuated statement Yahoo PR guy Brad Williams made about rumors of possible layoffs at the company:

Brad wrote: Yahoo! has been exploring ways to streamline our processes and bring new agility and efficiency to how we work as an organization. As part of this effort, we have engaged Bain & Co. to help us identify opportunities for improvement. This work is well underway, with the ultimate goal of positioning Yahoo! to achieve long-term, sustainable growth.

Translation: After I am laid off, I think we can all agree that this kind of stunning verbal acrobatics is sure to impress the folks over at Dunder Mifflin, where I hope to work next.

When Yahoo holds its first board meeting tomorrow–with three new board members, including shareholder activist Carl Icahn–there will be little time for getting-to-know-you chitty-chat.

In fact, it should be all business for the group, which needs to push the reset button hard for Yahoo.

Definite topics: the progress of talks to buy AOL from Time Warner (TWX)–probably Yahoo’s most attractive option, if it can get a good price–and which are more serious than has been reported; whether the company has any strategic interest in making up with Microsoft (MSFT) after a year of acrimony; how the company can attract new top-level talent to reinvigorate itself; how to make nice with disgruntled major investors; and, of course, how to react to the troubled economy, which is sure to impact the advertising business.

In fact, Yahoo (YHOO) CEO Jerry Yang is acutely aware that he and his management team have only a few months to really show investors and employees that they can get things moving at the beleaguered company.

Oddly enough, the Wall Street meltdown might not be such a bad thing for Yahoo, given that investors have a lot of other bigger problems to worry about now.

In relative terms, with a strong balance sheet, the company is quite healthy compared with many firms.

While a possible recession and subsequent negative impact on the ad market is not a good thing for Yahoo, it is not a good thing for anyone in the space.

And Yahoo remains one of the top players in terms of size and will be the place advertisers flee to in times of uncertainty.

“There is a lot to focus on, so we’re not in the spotlight as much,” said one source at the company. “That gives us a little breathing room.”

Well, a just a little. It is true that major Yahoo shareholders, such as Capital Research & Management’s Gordon Crawford, have more troubled stocks to pay attention to.

But Yahoo should use this time to rebuild badly damaged bridges here, and relations are still tense.

In fact, as was seen in the shareholder vote at the August annual meeting, the patience of investors like Crawford–who saw Yahoo turn down a $31 per share offer from Microsoft and now are living with a $19 price–is paper-thin.

So they will be ill-inclined to support management’s efforts without some effort by Yang and the board to clearly give them a road map to recovery.

(Memo to Jerry: Take Gordy to lunch alone and say sorry a lot.)

That support will be especially important if Yahoo tries to buy AOL, which it is again strongly considering as a way to bolster its ad business, international portfolio and email and content offerings.

Several sources I have spoken to recently have said that Yahoo leadership is very interested in doing such a deal, although not at the $10 billion price tag that Time Warner wants. (Think half and add a little more.)

In addition, there are some daunting regulatory and integration issues–AOL and Yahoo email and messaging combo would be a giant in the space, and the HQs of the companies are on opposite coasts.

But, the deal would give Yahoo some more experienced executives it needs, and make it more attractive to others who might not consider going to Yahoo in its present state.

Yang had been pinging a lot of execs over the last year and has had little uptake.

But a stronger and more flexible Yahoo–i.e., it knows it has to change dramatically–would surely be more enticing, especially in a down economy.

In addition, such a move–which was once opposed by some Yahoo execs–would now be seen as injecting energy in the company.

A Yahoo-AOL combination, however fraught, would still be a powerhouse, which would be bolstered by the 5 percent ownership Google (GOOG) has in AOL and its search partnership with the company.

Of course, that deal would doubtlessly get a lot of scrutiny, especially since Yahoo and Google’s impending ad-search deal is under pressure too.

And, obviously, the troika would get a lot of flak from Microsoft, which lost it takeover battle with Yahoo and has been engaged in a shooting match with Google on many fronts.

But some at Yahoo think a combo with AOL would give it a better chance to consider strategic partnerships with Microsoft too.

“A stronger Yahoo has more leverage with Microsoft,” said one source. “A lot of people think that it is not out of the question to restart a relationship with them when things settle down.”

Indeed not, although all this will require perfect execution on the part of Yang and Yahoo leadership, which has been sorely lacking over the last year.

But recent open initiatives and a focus on getting new products out the door are promising signs, as well as a sense that Web 2.0 companies that have made Yahoo look like a digital senior citizen are under pressure to perform financially, as Yahoo already does.

In other words, Yahoo has the chance to pull itself out of the fire–and, one hopes, not back into the frying pan.

The downward drift far from the it-can’t-drop-below-$20 barrier makes it clear that Wall Street is valuing the company at close to what it could sell its assets off for and not much more.

This obviously puts additional pressure on the already squashed-down Yahoo (YHOO) management to perform.

In fact, with all this pressure, you’d think Yahoo CEO Jerry Yang would have turned into a twin of the cursed Hope Diamond by now.

But Yahoo is not the only Web company getting bashed by the weak economy and continuing mortgage crisis. In a bruising market, shares of eBay (EBAY), Microsoft (MSFT), Amazon (AMZN) and Google (GOOG) have also been down about four to five percent this week in an already lackluster period this year.

In fact, on a year-to-date basis, it is Google that is off the most on a percentage basis (see chart below; click on the image to make it larger), with Amazon being the most hardy performer.

Nonetheless, it is not a particularly good situation for the whole sector or the smaller Web 2.0 players that have banked their futures on having an IPO or being slurped up by the bigger players.

Of course, Yahoo is the most vulnerable to attack because of the last year of turmoil, especially Yang, but also longtime board members, who are perhaps even more at risk.

As BoomTown wrote earlier this week, Yahoo execs must find a way to turn around its business and fast, clarifying its focus and streamlining its units, before someone does it for them.

That does not mean anything will happen though, because newly minted board member Carl Icahn can no longer be an activist as an insider and he only has two other possible allies on the board, who also recently joined as part of his cabal.

Thus, it is highly unlikely Icahn could force Yang to resign at this point, unless it was on Yang’s own steam.

While a lot of names for possible replacements have been bandied about and laughably unsubstantiated reports of a secret deal with Icahn for Yang to resign are floated, this is just wishful thinking for some unhappy investors.

Nonetheless, a change could be forced via yet another agitated outside investor, one smart observer noted to me, who could start another noisy circus and demand a split of the company (search to Microsoft, the content and communications assets to one of many companies like News Corp., Disney, Comcast).

Such a move would require a lot of energy, which is lacking in the market overall right now. In addition, tangling with Yahoo has already ground up Microsoft and Icahn, as well as disgruntled major investors like Gordon Crawford.

So, even in its decidedly prone state, taking on Yahoo once again is probably not for the faint of heart.

How much is AOL really worth?

Well, its own owner, Time Warner, has been trying to put a big, shiny $10 billion price tag on the much- beleaguered online unit for months now, as it dribbles out tiny leaks about hot-and-cold- running acquisition talks with both Yahoo (YHOO) and Microsoft (MSFT).

But after yesterday’s less-than-impressive results for AOL, which dragged down the crowing Time Warner CEO Jeff Bewkes could deservedly do over his company’s “The Dark Knight” and “Sex and the City” film successes, can it even hope to get that much?

Of course, $10 billion is about half as much as AOL was valued in late 2005, when Google (GOOG) forked over $1 billion for five percent of the unit.

At the time, no one actually believed the $20 billion was a real figure, but that it was due more to Google’s incentive to overpay in order to clinch a renewal of its search deal with AOL and ward off Microsoft’s aggressive efforts to steal that business away.

But AOL’s weakening performance in a tough economy makes figuring out a sale of AOL to Yahoo–its most sensible partner–more difficult than ever.

Let’s do the math, shall we?

(This analysis was suggested to me by someone familiar with both companies and makes a lot of sense.)

Let’s begin by assuming that Time Warner (TWX) would want to trade AOL for a stake in a merged newco entity, and by using the $10 billion value the media giant seeks.

This, by the way, does not include the profitable Internet access business, which Time Warner officially announced yesterday it would cleave from the AOL ad and content business and sell separately for $2 to $3 billion.

Next calculation: At $20 a share, Yahoo is worth $27.6 billion at yesterday’s close.

So with a new valuation of $37.6 billion ($27.6 billion plus $10 billion), Time Warner would then own 26.5 percent of the company, which is jokingly dubbed Yahol.

Maybe it is just me, but I can’t see Yahoo agreeing to this. Or its big and mighty disgruntled investors, such as Capital Research Global Investors’ Gordon Crawford, either.

To appease him and other shareholders, Yahoo might first, say, sell off those much-touted Asian assets and deliver a wad of cash to shareholders.

This move would yield about $8 billion, leaving a $19.6 billion market cap for Yahoo. In a combo in that scenario, Time Warner would then own 33.7 percent of the remaining company.

And while Time Warner could throw in some other assets to add value, like video rights or content from its other properties, it’s still a leap to imagine Yahoo would trade away that much of itself for a merger that has a 50-50 chance of succeeding.

That’s because both Yahoo and AOL have been feeling the pain of the downturn in the ad market and are each particularly vulnerable.

Yahoo’s second-quarter earnings, announced a few weeks ago, were weak, which management blamed on the economy.

And yesterday, Time Warner did the same, noting the ad business at AOL had stalled.

Revenue fell 16 percent in the second quarter to $1.06 billion, largely due to a massive fall-off in its subscription business, resulting in a 36-percent drop in net income.

But online advertising revenue grew only two percent, which is–let’s just say it–depressing, largely because of a 14-percent decline in the more lucrative display business, versus its healthier but lower-margin third-party ad business.

In addition, AOL still has to figure out how to properly monetize its newly acquired Bebo unit, which it woefully overpaid for, in an even more difficult environment for social networks.

And while turning to Microsoft for a better deal might seem a good idea, the software giant is also unlikely to want to overpay in this market.

Nonetheless, Time Warner must sell AOL, which was abundantly clear yesterday, as it does not fit in with the rest of its businesses and its weakness is dragging down the stock.

Unfortunately, it could turn out to be a fire sale. Using the old AOL catchphrase, to describe the odds of getting a huge pile of dough for AOL: You’ve Got Fail.

This incident will have ramifications in the coming weeks for the composition of Yahoo’s board. But here’s the shocking thing: This latest batch of numbers might still underrepresent the level of disdain shareholders have for this board.

Any corporate election that doesn’t receive 95 to 98 percent support from shareholders for the incumbent management and board is an anomaly. Yahoo’s first press release from last Friday suggested that, despite all the hubbub of the failed merger talks with Microsoft and public criticism from Carl Icahn and others, Yahoo (YHOO) shareholders had let the incumbents off the hook.

Chairman Roy Bostock and CEO Jerry Yang were re-elected with 79.5 percent and 84 percent support respectively. These relatively benign results (compared to last year’s), combined with the fact that there were not more pointed questions at the meeting last week, led some observers to conclude that this board had “faced down” its critics.

Not quite. Gordon Crawford of Capital Research Global Investors did all Yahoo shareholders a favor by demanding a recount. Yahoo and Broadridge complied.

And results of that recount were alarmingly different from the first set of numbers. We’ve all heard of +/- 4 percent in polling, but when was the last time you heard of +/- 50 percent?

The recount might set a modern-day record among S&P 500 companies for the most “withhold” votes for a board in a corporate election. Only Vyomesh Joshi, head of Hewlett-Packard’s (HPQ) printer group, got off without a serious warning from shareholders (a 7.1 percent “withhold” vote).

The “withhold” vote for Bostock was 39.6 percent, not 20.5 percent as originally reported. And 33.7 percent of Yahoo shareholders withheld their support from Yang, not 14.6 percent.

Other Yahoo directors who fared poorly in the election were Gary Wilson (27.7 percent of votes withheld) and Compensation committee members Ronald Burkle (37.9 percent withheld) and Arthur Kern (31.7 percent withheld).

What would we all be doing today if Crawford had never called for a recount? If a “tabulation error” happens and no one is there to hear it, did it happen at all? We will never know.

And there will likely be more shoes to drop in this tragedy of errors. This “tabulation error” was only one of two major question marks surrounding last Friday’s initial voting results. Yahoo easily made Broadridge the fall guy for this first error.

The second error–how few eligible shares were counted in the final tally–isn’t so easily eluded. And for that, Yahoo will be the fall guy.

Only 75.8 percent of the eligible shares as of the June 3 record date were voted in this election. After such intense media scrutiny in the past few months, it seems odd that so few investors participated.

Last weekend, I dove into the numbers in detail and reviewed them against numbers from the last two Yahoo elections. On Sunday night I wrote about the most recent Yahoo shareholder vote and verified that there were 200 million fewer votes cast this year compared to the average over the last two years. I called on Yahoo to appoint an independent third party to review and certify the voting process.

Yesterday, as news of the voting irregularities circulated, I received a number of complaints from frustrated shareholders.

Some claimed they had received multiple proxies from Yahoo over the last month, with several arriving Aug. 4–the Monday after the election. Some said they had had trouble voting by phone. Others, who had initially voted for Icahn’s slate, said when they tried to re-vote against the Yahoo board, they weren’t able to do so.

How many other shareholders encountered similar difficulties? Without a full inquiry, we’ll never know.

These missing votes could have had an even more significant impact on the overall results. For example, Bostock received “for” votes from fewer than half of the total shares eligible to vote (only 45.8 percent of the 1.4 billion shares eligible to vote). He truly lacks the approval of the majority of the shareholders he is supposed to represent. With a 47 percent vote, Burkle also lacks majority support. And while Yang won majority support, he did so by the skin of his teeth, with just a 50.2 percent vote.

Governance Matters

At Friday’s meeting, I asked Yang, Yahoo President Sue Decker and Bostock about three issues that suggest to me that Yahoo’s governance oversight has been lax.

(1) Why did Yahoo sell Overture Japan (a $396 million-per-year business) to Yahoo Japan for $13 million last August? Did Yang, who sits on Yahoo Japan’s board, recuse himself from the negotiations? Who negotiated on behalf of Yahoo and why did they agree to such a low price when Yahoo has a habit of paying three to five times revenues for companies like Zimbra, BlueLithium and Right Media?

(2) Decker serves on three Fortune 500 boards: Intel (INTC), Costco (COST), and Berkshire Hathaway (BRK). Her duties to those companies required her to attend at least 22 meetings last year, according to proxy filings. And each meeting required significant preparation. As a Yahoo shareholder, I fail to see how outside commitments like these benefit Yahoo. Are they really necessary? Shouldn’t Decker drop a few of them until Yahoo finds solid footing again?

(3) About a third–31 to 36 percent–of Yahoo shareholders voted against the re-election of Roy Bostock and fellow Compensation Committee members Burkle and Kern last year. Yet all three continue to sit on this committee (or the board). Why? And why did they agree to pay outside directors average total compensation of $500,000 last year? Google’s (GOOG) outside directors were paid $250,000, on average, for their services last year. Decker received $2,700 for sitting on the Berkshire Hathaway board (and $110,000 per year for serving on the Intel and Costco boards). Why is Yahoo paying its directors so much?

I found the trio’s answers to these questions unconvincing. Particularly surprising were Bostock’s comments on Compensation Committee member tenure and compensation.

In the first place, Bostock said while 32 percent of shareholders voted against his reelection last year, 68 percent voted for him. And that’s not bad, he said. This glass-half-full logic explains why he has never bothered to explain to shareholders why he, Burkle and Kern have remained on the Compensation Committee and the Yahoo board.

Second, Bostock disputed my assertion that Yahoo’s outside directors were paid an average of $500,000 last year. When I asked him if he was definitively stating that he did not receive compensation of about $500,000 last year, he said “yes.” Yet, according to Yahoo’s own proxy statement, Bostock earned total compensation of $499,264 last year. 2007 compensation for Yahoo’s other board members was as follows:

• Ronald Burkle: $482,046
• Eric Hippeau: $496,674
• Vyomesh Joshi: $519,520
• Arthur Kern: $496,990
• Robert Kotick: $492,774
• Edward Kozel: $516,202
• Mary Agnes Wilderotter: $205,832 (for five months of service; annualized $493,997)
• Gary Wilson: $482,046

The average compensation for each Yahoo outside director in 2007: $497,531.

Third, Bostock also claimed that this year’s vote would be a far better indication of shareholder support for Yahoo’s Compensation Committee than last year. With 39.6 percent of shareholders withholding support from Bostock and 37.9 percent withholding it from Burkle, isn’t it time for them to step aside?

Fool Me Once, Shame on You; Fool Me Twice, Shame on Me

Given all this, I am deeply concerned that my interests and those of all Yahoo shareholders are not being protected by the company’s board.

We need to know why 200 million shares were missing from this year’s vote as compared to the last two years’.

We need to know why so many proxies were mailed late to shareholders (on our dime).

We need to know why so many shareholders are questioning whether their votes were counted.

Yahoo will try to sweep all these concerns under the rug, but we shouldn’t allow it. The company should immediately appoint an independent third party to address these questions and assure shareholders that their votes were properly counted.

Immediate Changes to the Board

Also, Yahoo needs to immediately make some changes to the composition of its board. Bostock and Burkle should do the honorable thing and step down from this board.

In truth, this should have happened a year ago. One wonders what might have happened in the last 12 months with Microsoft negotiations had Yahoo acted swiftly, following the 2007 annual meeting, to remove them.

]]> http://allthingsd.com/20080806/jackson/feed/ 0 http://allthingsd.com/20080805/new-yahoo-shareholder-vote-yang-disapproval-more-than-doubles/ http://allthingsd.com/20080805/new-yahoo-shareholder-vote-yang-disapproval-more-than-doubles/#comments Tue, 05 Aug 2008 21:06:24 +0000 Kara Swisher http://kara.allthingsd.com/?p=2509 The vote is now in and it’s not so pretty for Yahoo, as it turns out.

Broadridge Financial Solutions’ corrected tabulation of the vote at the Yahoo annual meeting on Aug. 1, without the “truncation errors,” came out and, it seems, shareholders are actually mighty irked at Yahoo leadership.

Most glaringly, the new result shows Yahoo CEO Jerry Yang’s disapproval more than double what was previously reported, rising from 14.6 percent votes withheld to 33.7 percent. Yahoo Chairman Roy Bostock saw his shares withheld rise from 20.5 percent to 39.6 percent.



Yang (pictured here), who has been under fire for his management of Yahoo (YHOO), is likely to now endure yet another round of questioning about whether he should stay in his job in the wake of this massive show of disapproval by investors.

Here is part of Yahoo’s press release, with the correct and incorrect tables below:

Yahoo! Acknowledges Tabulation Error by Broadridge

SUNNYVALE, Calif., August 5, 2008 – Yahoo! Inc. (Nasdaq: YHOO) was informed today by Corporate Election Services, the inspector of elections for the Yahoo! annual meeting of shareholders on August 1, 2008, that Corporate Election Services was notified this morning by Broadridge Financial Solutions, Inc., an independent voting intermediary that processes proxies on behalf of banks, brokers and institutions, of errors made by Broadridge in reporting votes at the meeting. Specifically, as Broadridge publicly disclosed earlier today, when Broadridge reported voting results for “withholds,” a truncation error occurred in reporting share numbers that exceeded eight digits.

The following table reflects the corrected Broadridge numbers:

Roy Bostock (Shares For: 632,023,657/60.4%; Shares withheld 414,071,927/39.6%)

Ronald W. Burkle (649,373,291/62.1%; 396,722,293/37.9%)

Eric Hippeau (948,862,579/90.7%; 97,233,005/9.3%)

Vyomesh Joshi (971,594,650/92.9%; 74,500,934/7.1%)

Arthur H. Kern (714,871,925/68.3%; 331,223,659/31.7%)

Robert A. Kotick (967,044,818/92.4%; 79,050,766/7.6%)

Mary Agnes Wilderotter 964,939,727/92.2%: 81,155,857/7.8%)

Gary L. Wilson (756,006,576/72.3%; 290,089,008/27.7%)

Jerry Yang (693,055,602/66.3%;353,039,982/33.7%)

The following table shows the original voting results certified by the inspector of elections, as previously reported:

Roy J. Bostock (Shares for: 832,023,657/79.5%; Shares Withheld: 214,071,927/20.5%)

Ronald W. Burkle (849,373,291/81.2%; 196,722,293/18.8%)

Eric Hippeau (948,862,579/90.7%; 97,233,005/9.3%)

Vyomesh Joshi (971,594,650/92.9%; 74,500,934/7.1%)

Arthur H. Kern (814,871,925/77.9%; 231,223,659 /22.1%)

Robert A. Kotick (967,044,818; 92.4%; 79,050,766/7.6%)

Mary Agnes Wilderotter (964,939,727/92.2%; 81,155,857/7.8%)

Gary L. Wilson (856,006,576/81.8%; 190,089,008/18.2%)

Jerry Yang (893,055,602/85.4%; 153,039,982/14.6%)

]]> http://allthingsd.com/20080805/new-yahoo-shareholder-vote-yang-disapproval-more-than-doubles/feed/ 2 http://allthingsd.com/20080805/broadridge-to-yahoo-oops-we-added-wrong-and-shareholders-like-you-lots-less/ http://allthingsd.com/20080805/broadridge-to-yahoo-oops-we-added-wrong-and-shareholders-like-you-lots-less/#comments Tue, 05 Aug 2008 17:07:09 +0000 Kara Swisher http://kara.allthingsd.com/?p=2507

Here’s the full statement (below) from the outside firm, Broadridge Financial Solutions, that tabulated Yahoo’s recent shareholder vote.

Bottom line: An underreporting of shares withheld for certain directors, which the Lake Success, N.Y., shareholder services firm is calling an “isolated incident” and also a “truncation error.”

That sounds painful.

And it is likely Yahoo CEO Jerry Yang will feel much of that pain, as sources said the shares are largely those that were withheld from him by disgruntled shareholders.

While the mistake will not change the vote’s overall outcome, in which all current Yahoo (YHOO) directors were re-elected, it will surely make the no-vote tally worse than first reported for many directors, and underline more clearly the increased investor disappointment directed at Yahoo leadership.

As reported Friday, for example, Yang only had 14.6 percent withheld, with 85.4 percent voting for him, which was better than the year before.

A Yahoo spokesman said the company was redoing its results, based on the new information, and would release the new numbers soon. The Internet company did not do the vote tabulation.

The examination of the results was prompted by an unusually positive Yahoo shareholder vote, when it did not seem to include the withheld votes of one major Yahoo shareholder.

Thus, Capital Research & Management asked Broadridge for a recount of its votes.

The problem centered on how shares were tallied in the Yahoo annual meeting, specifically related to a group of votes withheld by Capital Research Global Investors.

That fund owns almost seven percent of Yahoo, and its head, Gordon Crawford, had recommended withholding votes from Yahoo.

Here is the statement from Chuck Callan, Senior Vice President Regulatory Affairs at Broadridge:

On August 4, Broadridge was notified by an investor of a potential discrepancy in a reported vote at the Yahoo Annual Meeting on August 1.

Upon review, it was determined that there was a truncation error in the final printout sent to the tabulator. This resulted in the underreporting of shares withheld for certain directors.

This error did not change the outcome of the election of directors, and was determined to be an isolated incident.

Broadridge has determined that the situation was unique–a truncation error occurred when shares withheld for a specific director in a specific nominee exceeded 8 digits and were reported to the tabulator in paper format. Broadridge has fixed the problem. Further, Broadridge has verified that over the past 18 months there were no other meetings with reports that included this unique combination of factors. The review is ongoing for meetings occurring before then.

On August 4th Broadridge notified Yahoo’s Inspector of Elections and Tabulator of the problem, and a revised report was issued on August 5th.

]]> http://allthingsd.com/20080805/broadridge-to-yahoo-oops-we-added-wrong-and-shareholders-like-you-lots-less/feed/ 1 http://allthingsd.com/20080805/the-yahoo-shareholder-vote-like-florida-except-more-confusing/ http://allthingsd.com/20080805/the-yahoo-shareholder-vote-like-florida-except-more-confusing/#comments Tue, 05 Aug 2008 13:50:33 +0000 Kara Swisher http://kara.allthingsd.com/?p=2503

All Yahoo needs now is for former Florida Secretary of State Katherine Harris to show up and start recounting votes.

It could happen, given all the crazy characters who have been drawn to the much-beleaguered Internet company like a magnet, in 2008.

It’s almost as if there is a voodoo curse on Yahoo (YHOO).

So, you didn’t think the digital gods would let it have more than one weekend of good news, did you?

No, they will not, it seems.

After the annual meeting last Friday, which went off without a hitch and, more importantly, without an expected major shareholder vote against the company’s management and board, you could feel a palpable easing of tension among Yahoo leadership and its exhausted PR team.

By Monday, the Yahoo shareholder kerfuffle–in essence, one major shareholder of Yahoo has asked for its outside tabulator of investor votes at the annual meeting for a recount–had landed with a thud.

The problem is how shares were tallied in the Yahoo annual meeting, specifically around whether a group of votes withheld by Capital Research Global Investors was not counted, counted incorrectly or even voted incorrectly by the investor.

Parent company Capital Research & Management confirmed that it had asked Broadridge Financial Solutions, a Lake Success, N.Y.-based financial services company that does securities clearing and processing, to investigate whether those votes were correctly counted on behalf of its Capital Research Global Investors fund.

Capital Research Global Investors–one of two funds separately managed at Capital Research & Management–owns 6.5 percent of Yahoo, according to recent filings, and Capital World Investors owns 9.8 percent.



Capital Research Global Investors is run by legendary media investor Gordon Crawford (pictured here), who has become disenchanted with Yahoo over the last year.

Because of that, sources close to the fund’s thinking said Crawford had recommended that the fund withhold votes from CEO Jerry Yang and some other board members.

It’s not clear whether that actually happened or, if it did, whether the votes were tallied properly.

That’s because Yang, for example, only had 14.6 percent withheld, with 85.4 percent voting for him.

The votes withheld seemed low to Capital, considering Crawford’s large stake and how many shareholders have been deeply unhappy with Yahoo management this year.

Instead, overall results for Yang and the Yahoo board were mostly better than last year.

Everyone is investigating, of course–from Capital Research to Broadridge to Yahoo, which does not do its own tabulation, although it has hired an outside proxy solicitor to manage the process–to try to find out what’s what.

It is likely there’s a nonsinister reason for the voting results.

And there might be a lot of possible explanations, but I am partial to blaming the confusion that followed after activist investor Carl Icahn pulled his proxy fight a week before the meeting and made nice with Yahoo.

Unfortunately, Icahn’s golden proxy ballot was already in the hands of investors, many of whom might have voted for it and then had that vote essentially voided.

Wrote one BoomTown reader and Yahoo shareholder:

“I hold 23,000 shares of YHOO. I had 17,000 on the date of record. I voted to ‘withhold all’ … I think twice. Then I voted for all of Carl’s team. Now I have learned that the Carl votes did not count and a day AFTER the annual meeting I received my new ballot. I wonder how many other people were disenfranchised??? Who can I complain to?? Is this how Jerry got his support??”

Another commenter on the site also wrote:

“As a stockholder, I was curious *which* of my proxy letters actually was counted–I received four. One was from Icahn, the other three were from Yahoo. The last of which arrived today, August 4th. Does this strike anyone as odd?”



Actually, Yahoo’s twisting journey passed odd a long time ago and is now headed toward “The X-Files” territory.

(So let’s all triple-hope Yang’s upcoming trip to China for the Olympics goes smoothly. Have a good time, Jerry, we’ll be back here counting!)

]]> http://allthingsd.com/20080805/the-yahoo-shareholder-vote-like-florida-except-more-confusing/feed/ 2 http://allthingsd.com/20080804/yahoo-shareholder-vote-number-crunching-whither-cap-res-no-vote/ http://allthingsd.com/20080804/yahoo-shareholder-vote-number-crunching-whither-cap-res-no-vote/#comments Mon, 04 Aug 2008 21:39:26 +0000 Kara Swisher http://kara.allthingsd.com/?p=2497

There is a mini-tempest brewing over how shares were tallied in the Yahoo annual meeting last Friday, specifically around whether a group of votes withheld by one of Yahoo’s major shareholders was not counted, counted incorrectly or even voted incorrectly by the investor.

According to sources close to the thinking at Capital Research & Management, the proxy committees for its two large funds that hold a significant stake in Yahoo (YHOO) recommended last week that they withhold votes specifically from CEO Jerry Yang and from various board members, such as Chairman Roy Bostock, to register disappointment with their performance.

Thus, the investment fund confirmed it had approached outside vote tabulator Broadridge Financial Solutions, a Lake Success, N.Y.-based financial services company that does securities clearing and processing, to investigate whether those votes were correctly counted on behalf of its Capital Research Global Investors fund.

Capital Research Global Investors–one of two funds separately managed at Capital Research & Management–owns 6.5 percent of Yahoo, according to recent filings, and Capital World Investors owns 9.8 percent.

Capital Research Global Investors’ investor Gordon Crawford has been vocal about his disappointment with Yang and the board at Yahoo.

And sources close to the fund’s thinking said Crawford recommended that it withhold votes from Yang and some other board members.

Capital World Investors has been less critical of Yahoo, but sources said it was also leaning toward voting at least some of its stake against the company’s leadership.

But Yang, for example, only had 14.6 percent withheld, with 85.4 percent voting for him. Bostock fared worse, grabbing only 79.5 percent of the yes vote, with 20.5 percent withheld.

That would mean, assuming a large part of Capital Research’s votes to withhold were counted, that only a few other investors voted against Yahoo.

This is highly unusual in a year when many shareholders have been deeply unhappy with its management.

But, in fact, overall results for both Yang and Bostock were actually better than last year.

I called Broadridge for comment and am awaiting a response.

Yahoo does not do its own tabulation, which must be done by a third party, although it has hired MacKenzie Partners as a proxy solicitor to manage the process.

Said a spokesman in response to my inquiry about the situation:

“The independent inspector of elections certified the results of the election and Yahoo! accurately announced those results. Yahoo! did not participate in the execution of the votes and was not a party to any errors which may have been made either by a voting institution or a proxy processing intermediary acting on behalf of banks, brokers and institutions.”

While the recommendations of the proxy committees at Capital Research are apparently not binding on some individual directors of smaller funds that make up the larger ones, they typically follow along with the overall decision from the top.

They might not have in this case, of course, or they might not have voted the shares at all, although it is also possible they could have voted incorrectly or that the votes were not tallied properly.

This is better than a hanging chad!

Another unusual issue around the voting: The amazing drop in the number of shares that were voted at all.

In 2008′s shareholder tally (see below for individual director numbers), only 75.8 percent, or 1,046,095,584 out of 1,381,008,701 possible share votes, were cast.

There were 1,205,435,371 votes cast in 2007 and 1,276,175,601 in 2006, a much higher percentage of overall votes.

Sources at Yahoo speculated that this could be due to the fact that most investors vote automatically in an uncontested election and were waiting for an outcome in the proxy fight between activist investor Carl Icahn and Yahoo.

After that issue was settled right before the annual meeting, though, some investors might not have even bothered to vote.

More to come, but here are the pertinent stats on the Yahoo vote as of Friday:

Roy J. Bostock (Shares for: 832,023,657/79.5 %; Shares Withheld: 214,071,927/20.5%)

Ronald W. Burkle (849,373,291/81.2%; 196,722,293/18.8%)

Eric Hippeau (948,862,579/90.7%; 97,233,005/9.3%)

Vyomesh Joshi (971,594,650/92.9%; 74,500,934/7.1%)

Arthur H. Kern (814,871,925/77.9%; 231,223,659 /22.1%)

Robert A. Kotick (967,044,818; 92.4%; 79,050,766/7.6%)

Mary Agnes Wilderotter (964,939,727/92.2%; 81,155,857/7.8%)

Gary L. Wilson (856,006,576/81.8%; 190,089,008/18.2%)

Jerry Yang (893,055,602/85.4%; 153,039,982/14.6%)

]]> http://allthingsd.com/20080804/yahoo-shareholder-vote-number-crunching-whither-cap-res-no-vote/feed/ 7 http://allthingsd.com/20080729/yahoo-annual-meeting-countdown-3-days-to-go-jerrys-staying-put/ http://allthingsd.com/20080729/yahoo-annual-meeting-countdown-3-days-to-go-jerrys-staying-put/#comments Tue, 29 Jul 2008 08:16:09 +0000 Kara Swisher http://kara.allthingsd.com/?p=2448

It is not exactly news that influential major Yahoo investor Gordon Crawford (pictured here) was displeased with Yahoo CEO Jerry Yang, given the amount of money Crawford must have lost by now, backing the troubled Internet company.

While BoomTown referenced it in a more veiled way last week, the New York Post yesterday reported that the Capital Research Global Investors honcho was considering withholding votes from Yang and others on its current board at Yahoo’s annual meeting Friday to show his unhappiness publicly.

More to the point, I would assume the move is to perhaps prompt others to ponder whether Yang should remain in his current job for much longer.

What effect that will have on Yang, though, will probably be negligible–except for perhaps feeling badly, as he has great regard for Crawford–because I think he has never been more determined to stay put.

In fact, I predict a series of partnerships and high-profile announcements–starting this week ahead of the annual meeting–to give Yahoo and Yang the image of momentum they dearly need.

While many kibitz over Yang’s fate and wonder who activist investor Carl Icahn is dreaming of replacing him with once he gets on board (AOL’s Jon Miller? Google’s Tim Armstrong?) at the company, I think Yang is aiming at finally getting the chance to prove he can run Yahoo without the Sturm and Drang of a hostile takeover hanging over him.



Yang (pictured here) clearly thinks he deserves more time to turn around Yahoo’s core businesses and improve employee morale.

And he will probably get it, if he wants to stay, because there is actually no one who can effectively oust him, until, that is, Yahoo (YHOO) stock drops to the mid-teens based on troublesome future financial signals.

That could come if the Google (GOOG) search-ad outsourcing deal does not pan out as well as expected, for example, especially in the current economic downturn, or if Yang cannot hang onto the talent he has left to work with.

But all these chickens, should they come home to roost, are at least six to nine months away, the same amount of time Yang has been caught in Yahoo’s current Twilight Zone of mess.

Of course, due to all that, Yang’s tenure has been particularly rocky, almost since he took over in a rush from former CEO Terry Semel.

It was at last year’s board meeting on June 12 that Yang told those assembled that he had no interest in filling the then-open CTO slot, even jokingly saying he preferred to play golf.

Of course, he was in the CEO seat within a week, part of some still-mysterious moves that got Semel out and Yang in.

Does it feel like 134 years since then, or is it just me?



It certainly must feel like a long time to Yang, although he seems only to have gotten more emboldened throughout this whole circus, made up largely of what feels like an endless series of freak acts.

Such hijinks are a nightmare to mannered investors like Crawford, who frowns on such behavior from all sides and tries to convince the leadership of companies he invests in to act with more realism and less emotion.

Too bad the Yahoo situation has been a soap opera from the start, which is definitely not what Crawford likes.

I wrote about the troubled relationship between Crawford and Yahoo when the threat of a proxy fight by Icahn was still looming.

Sources then told me that Crawford was considering backing Icahn, who is not exactly his first choice. But his dissatisfaction with Yahoo leadership was by then running very deep.

I also posted, for Yang’s benefit, an excerpt from my second book about how the normally polite, erudite and calm Crawford had finally had enough with AOL Time Warner’s (TWX) Steve Case and helped give him the heave-ho many years ago.

Crawford’s Capital Research Global Investors fund–one of two separately managed at Capital Research & Management–owns 6.5 percent of Yahoo, according to recent filings. (Capital World Investors, which is not run by Crawford, owns 9.8 percent.)

Thus, when he wants to, Crawford can wield a mighty cudgel–and a vote of “no confidence” by withholding votes, especially such a big stake, would clearly look bad for Yang, even if it were largely a symbolic move.

But bad does not mean fatal, and it could be, once again, that Yang will live to fight yet another day.

]]> http://allthingsd.com/20080729/yahoo-annual-meeting-countdown-3-days-to-go-jerrys-staying-put/feed/ 0 http://allthingsd.com/20080709/demand-medias-richard-rosenblatt-speaks-and-says-hes-not-for-sale-to-yahoo-for-now/ http://allthingsd.com/20080709/demand-medias-richard-rosenblatt-speaks-and-says-hes-not-for-sale-to-yahoo-for-now/#comments Wed, 09 Jul 2008 11:56:19 +0000 Kara Swisher http://kara.allthingsd.com/?p=2301

When I was in Los Angeles recently, I stopped by the Santa Monica offices of Demand Media, the network of social networking sites and apps maker, because of the rumors that I had heard swirling around that Yahoo was looking to purchase it for up to $2 billion.

Such a major deal seemed to me to be a rash one for Yahoo (YHOO) to make at this point, due to its current turmoil, as it seeks to find ways to socialize its massive content and communications assets more quickly.

As it turned out, reports of that possibility were greatly exaggerated, mostly due to a dinner that top Yahoo execs Hilary Schneider and Scott Moore had with its founder and CEO Richard Rosenblatt the very night I was visiting, which was not treated like a secret in any way whatsoever.

(I called Moore and Schneider, in fact, to tell them Rosenblatt would be late due to our interview, and I am guessing they would not have picked up for me if they were in the midst of prepping a big offer.)

Rosenblatt played down the idea of any Yahoo offer on the record, noting he was not interested in selling at this point anyway.

“There is a lot of potential here and I want to build a big company for the long-term,” said Rosenblatt, who has sold several. And while IPO plans are not in the near future, one imagines Demand could work toward that.

And Yahoo sources confirm that there has been no offer floated.

But there is no question that Schneider, who just took over all U.S. operations at Yahoo, is very interested in partnering in a significant way with Demand, because it has built a profitable company that creates a plethora of ad-impression-generating social networks of all kinds.

The bigger Demand sites are eHow, and Livestrong, a health-oriented site in partnership with famous cyclist Lance Armstrong.

The company also has a major domain registry business and recently acquired Pluck, which powers social networking features on many other sites, such as the Washington Post.

So far, gold-plated investors like Goldman Sachs (GS), Oak Investment Partners–and even a private investment from major Yahoo investor Gordon Crawford–have poured almost $400 million into the company.

Nonetheless, some wonder whether the patchwork of sites–many of which get content from other Demand sites, along with its many other disparate businesses–adds up to a multi-billion-dollar valuation quite yet.

Still, at some point when it is not in the free fall it is currently in, Yahoo might make a great purchase for Demand.

And it could certainly use the dose of energy from the ebullient Rosenblatt–who came from a paparazzi-clogged lunch with Armstrong, his latest squeeze Kate Hudson and her mother, Goldie Hawn, right before our chat.

And, in fact, Rosenblatt, who was former CEO of Intermix, which owned MySpace (Rosenblatt was chairman) and sold it to to News Corp. (NWS)–the owner of Dow Jones and All Things Digital–might indeed be the kind of bold, swing-for-the-fences exec Yahoo needs to reinvent itself.

But, as you will see in this long video interview below, he has some interesting ideas about where he can take the start-up first.

Here’s the video:

]]> http://allthingsd.com/20080709/demand-medias-richard-rosenblatt-speaks-and-says-hes-not-for-sale-to-yahoo-for-now/feed/ 4 http://allthingsd.com/20080707/major-yahoo-investor-leans-toward-backing-carl-icahn-too/ http://allthingsd.com/20080707/major-yahoo-investor-leans-toward-backing-carl-icahn-too/#comments Mon, 07 Jul 2008 16:46:44 +0000 Kara Swisher http://kara.allthingsd.com/?p=2286 Microsoft’s not the only one possibly backing billionaire investor Carl Icahn in his quest to unseat Yahoo’s leadership and board–major Yahoo investor Gordon Crawford told Yahoo CEO Jerry Yang in a face-to-face meeting last week that he was seriously considering voting against Yahoo (YHOO) in the looming proxy fight.



The troubled meeting that took place last Tuesday in Los Angeles between Capital Research Global Investors’ Crawford (pictured here) and Yang–accompanied by three Yahoo board members–could be seen as a portent of what is to come at the company’s annual meeting on August 1.

And those signs are definitely not good for Yahoo’s current leaders.

At the meeting, according to several sources with knowledge of the encounter, Yang–as well as Yahoo Chairman Roy Bostock and board members Ron Burkle and Gary Wilson–strongly defended their actions thus far.

That included claiming Yahoo’s recent management reorganization was sound–despite internal unrest over it–and calling top execs who have recently left the company “MBA types,” even though several were key tech leaders.

Yang also underscored his opinion that Yahoo needed to keep its online ad search business intact with its display business, rather than sell it off to Microsoft (MSFT), although he noted the company was open to all proposals.

But Crawford and his top analysts aggressively questioned Yang’s assertions and pressed him on Yahoo’s strategy going forward.

And they indicated they had lost patience, as Yahoo shares have drifted downward in the wake of the collapse of Microsoft’s takeover attempt.

Microsoft had offered $31 a share for Yahoo and dangled a $33 price for the company, whose stock has been trading lately in the low $20s.

According to sources, Crawford told the Yahoo contingent that he was considering backing Icahn’s new board slate–although he has not yet firmly committed to it–if the company did not engage with Microsoft over some sort of deal or find a suitable alternative.

Crawford’s Capital Research Global Investors fund–one of two separately managed at Capital Research & Management–owns 6.5 percent of Yahoo, according to recent filings. Capital World Investors, which is not run by Crawford, owns 9.8 percent.

Abandonment by Crawford, an influential investor who has become increasingly and publicly disdainful of Yang and its board, means the unlikely chance that Icahn could topple Yahoo’s board and make good on his promise to throw the Yahoo co-founder out becomes a much more distinct possibility.

Of course, that got another boost today with a classic wrestling double-body slam that Icahn and Microsoft CEO Steve Ballmer perpetrated on Yang today by unveiling their own dysfunctional love match–united in hatred of current Yahoo leadership.

The move was a little sneaky and a lot crude–and mostly served to unveil just how much Microsoft dissembles about its shifting interest and non-interest in Yahoo.

But it was still an effective blow.

Wrote Icahn in an open letter to Yahoo shareholders:



“Steve made it clear to me that if a new board were elected, he would be interested in discussing a major transaction with Yahoo!, such as either a transaction to purchase the ‘Search’ function with large financial guarantees or, in the alternative, purchasing the whole company.”

Like Tweedledee to Tweedledum, Microsoft quickly followed up with its own clearly coordinated statement:

“We confirm, however, that after the shareholder election Microsoft would be interested in discussing with a new board a major transaction with Yahoo!, such as either a transaction to purchase the ‘Search’ function with large financial guarantees or, in the alternative, purchasing the whole company.”

It is a union weary Yahoo investors like Crawford might welcome.

“I never though Carl [Icahn] would really prevail,” said one Yahoo source last week. “But losing the support of a major investor like Crawford would create a very slippery slope.”

Indeed, as the stock situation has deteriorated, investors have been pressuring Yahoo and also Microsoft for weeks to engage in new talks about a sweeping search and investment deal and perhaps more.

While Microsoft has been considering a sweetened bid, it was irked by Yahoo’s recent filing that called the software giant “unresponsive and inconsistent” in its intentions toward buying Yahoo.

Yahoo has clearly been trying to make the case that Microsoft had never intended to actually buy the company.

In its own statement about the Icahn-Microsoft lovefest, Yahoo said: “If Microsoft and Mr. Ballmer really want to purchase Yahoo!, we again invite them to make a proposal immediately.”

Well, as it turned out today, Microsoft doesn’t intend to buy Yahoo now–at least from Yang.

Said Microsoft in its statement today:

“Despite working since January 31 of this year, as well as in the early part of last year, we have never been able to reach an agreement in a timely way on acceptable terms with the current management and Board of Directors at Yahoo!. We have concluded that we cannot reach an agreement with them.”

Icahn is another story, of course. For now.

]]> http://allthingsd.com/20080707/major-yahoo-investor-leans-toward-backing-carl-icahn-too/feed/ 3 http://allthingsd.com/20080623/veohs-dmitry-shapiro-speaks/ http://allthingsd.com/20080623/veohs-dmitry-shapiro-speaks/#comments Mon, 23 Jun 2008 13:30:11 +0000 Kara Swisher http://kara.allthingsd.com/?p=2210

Recently, while I was at a conference in Los Angeles, I caught up with Veoh Founder Dmitry Shapiro.

BoomTown will be focusing a lot on online video this year and Veoh is one of the several online video-sharing sites–a group of smaller players that includes sites like Joost, Hulu, Dailymotion, Vimeo and others that I like to call not-YouTube.

But there are pluses to not being the Google-owned (GOOG) video behemoth, in that major entertainment companies who want to figure out how to put their content online aren’t wondering all day long whether to hug or sue you (or both if you are Sumner Redstone).

Today, for example, the Los Angeles-based Veoh announced that the ABC (DIS) television network would put full episodes of its hot prime-time shows–such as “Ugly Betty” (love it) and “Desperate Housewives” (not so much)–up on the site on a non-exclusive basis.

While Veoh has a lot of short, user-generated material, it has also made a push to get more professional material from big media companies like CBS (CBS)–which wins kudos for being the most promiscuous of networks–on its service.

Interestingly in this deal, media connections seem at play here: Disney-owned ABC is giving over content to Veoh, which has former Disney poobah Michael Eisner as one of its principal investors.

The traffic-type deal is typical–Veoh gets paid to send audience to ABC’s site or gets it to use ABC’s really nice player, and ABC tries to monetize it. Veoh currently says it has 28 million unique monthly visitors.

Of course, Veoh is also trying to figure out that nettlesome monetization issue that all online video sites face, which centers on building audience with the attractive big media content and then getting them to watch other ad-supported fare on its site.

But, as with all video sites, it is still in the early stages and, thus, Veoh got another tidy pile of new funding just two weeks ago to help it muddle through.

That would be $30 million more to add to the kitty of about $40 million previously raised.

Along with existing investors–Shelter Capital Partners, Spark Capital, Goldman Sachs (GS), Eisner’s Tornante Company, Tom Freston’s Firefly3, Time Warner (TWX) Investments and Jonathan Dolgen–Veoh’s latest round included Intel Capital, Adobe Systems (ADBE) and also media and tech investor Gordon Crawford.

I talked to Shapiro, who now serves as Veoh’s chief innovation officer, about the money and more here:

]]> http://allthingsd.com/20080623/veohs-dmitry-shapiro-speaks/feed/ 0 http://allthingsd.com/20080604/yahoo-players-burkle-icahn-crawford-and-also-the-web-make-some-news-some-not-so-good/ http://allthingsd.com/20080604/yahoo-players-burkle-icahn-crawford-and-also-the-web-make-some-news-some-not-so-good/#comments Wed, 04 Jun 2008 13:06:10 +0000 Kara Swisher http://kara.allthingsd.com/20080604/yahoo-players-burkle-icahn-crawford-and-also-the-web-make-some-news-some-not-so-good/ You would have to have been under a rock not to have heard about the controversial piece in Vanity Fair magazine this month about the escapades of former President Bill Clinton since he left office.

Called “The Comeback Id” (oh, how pun-ny!), the article has gotten a lot of attention for pointing out the rampant speculation that Clinton’s well-known penchant for marital infidelity had returned.



And the reason for that disturbing development, besides Clinton himself? The piece actually placed a good bit of the blame on Clinton’s close friend, grocery magnate and billionaire Ron Burkle (pictured here), who also has been one of the key directors at Yahoo (YHOO) in its takeover fight with Microsoft (MSFT).

It’s a wonder Burkle can focus on the turmoil at Yahoo, given how busy he appears to be in the article corrupting Clinton both personally and–worse–professionally, via some questionable investments the pair had made through Burkle’s Yucaipa Companies.

Writer Todd Purdum paints a decidedly unattractive picture of Burkle, noting even the tasteless nickname of Burkle’s plane these days, in a portrayal so rough that Yahoo CEO Jerry Yang’s tough treatment by the press recently looks like a walk in the park.



Well, almost.

In what amounts to a rant by Carl Icahn (pictured here), The Wall Street Journal gives the billionaire investor lots of room to kvetch about what he thinks of Yang, including asserting that he will oust the Yahoo founder if he wins his proxy fight against the company.

“I am amazed at the lengths that Jerry Yang and the board went to entrench themselves in this situation,” said Icahn.

Apparently, Icahn was the only one who didn’t get the memo that Yahoo has been consistently obstreperous about Microsoft’s many overtures, since–well, let’s do the exact calculations–forever. And a day.

Still, Icahn perseveres and hangs this old entrenched management chestnut on a lawsuit that was recently filed by shareholders that points to the massive and costly severance plan Yahoo sneakily put into place as a ploy to fend off Microsoft.

“It’s no longer a mystery to me why Microsoft’s offer isn’t around,” Icahn said. “How can Yahoo keep saying they’re willing to negotiate and sell the company on the one hand, while at the same time they’re completely sabotaging the process without telling anyone.”

How? By Yang opening his mouth, that’s how, and then doing nothing much.

As a student of this lugubrious style of Olympic dithering, I would point Icahn to Yang’s 100-day Sacred Cow VisionQuest, well before this soap opera got started.

You need to catch up pronto, Carl!



And speaking of people irked by Yang of late, investor Gordon Crawford (pictured here) also made some news yesterday with his investment in Veoh Networks, part of a $30 million round that included Intel Capital and Adobe Systems (ADBE).

Existing investors in the not-YouTube video service–Shelter Capital, Spark Capital, Goldman Sachs (GS), Michael Eisner’s Tornante Company, Time Warner Investments (TWX) and Jonathan Dolgen–also ponied up more money.

Crawford, the SVP of Capital Research Global Investors, manages a massive portfolio, and it is one of Yahoo’s biggest shareholders.

And, unlike Veoh, Yahoo is an investment Crawford has not been happy with recently.

“I am extremely angry at Jerry Yang and at the so-called independent board,” he said in an interview a month ago. “I’m hoping that there is such an outpouring of outrage that the board is embarrassed into revisiting this thing, but I’m not optimistic about that.”

And by independent board, by the way, he meant directors like–you guessed it–Ron Burkle!

At least Burkle’s not to blame for the so-so, lots-and-lots-missing–Google? What Google? (GOOG)–piece in the same Vanity Fair issue, an oral history of the Internet.

Called “How the Web Was Won,” it makes the founding of the world’s most important medium seem awfully dull.



I’d recommend instead–as any sentient being would–the cover story on Angelina Jolie, with this sharp quote from her: “In my father’s generation, the product was 80% of what you were putting into the world, and your personal life was 20%. It now seems that 80% of the product I put out is silly, made-up stories and what I’m wearing.”

Or not wearing, in the case of the pictures of Jolie in this article.

]]> http://allthingsd.com/20080604/yahoo-players-burkle-icahn-crawford-and-also-the-web-make-some-news-some-not-so-good/feed/ 0 http://allthingsd.com/20080515/boomtown-decodes-carl-icahns-letter-to-yahoo/ http://allthingsd.com/20080515/boomtown-decodes-carl-icahns-letter-to-yahoo/#comments Thu, 15 May 2008 21:01:02 +0000 Kara Swisher http://kara.allthingsd.com/20080515/boomtown-decodes-carl-icahns-letter-to-yahoo/

BoomTown’s most favorite part of the Yahoo takeover circus?

The dueling letters, of course! How the lovely practice of missives has fallen out of favor, as soulless emails have grown in use.

Well, not in the land of hostile takeovers!

So here’s our decoding of billionaire investor Carl Icahn’s thankfully brief letter to Yahoo’s Chairman Roy Bostock, informing Yahoo (YHOO) he begins bombing in five minutes.

Icahn wrote:

Carl C. Icahn
ICAHN CAPITAL LP
767 Fifth Avenue, 47th Floor
New York, NY 10153

May 15, 2008

Roy Bostock
Chairman
Yahoo! Inc.
701 First Avenue
Sunnyvale, CA 94089

Dear Mr. Bostock:

Translation: Who are you? Whatever. I regret to inform you, but I eat wimpy Chairman of the Board types like you for breakfast.

Icahn wrote: It is clear to me that the board of directors of Yahoo has acted irrationally and lost the faith of shareholders and Microsoft. It is quite obvious that Microsoft’s bid of $33 per share is a superior alternative to Yahoo’s prospects on a standalone basis. I am perplexed by the board’s actions. It is irresponsible to hide behind management’s more-than-overly optimistic financial forecasts. It is unconscionable that you have not allowed your shareholders to choose to accept an offer that represented a 72% premium over Yahoo’s closing price of $19.18 on the day before the initial Microsoft offer. I and many of your shareholders strongly believe that a combination between Yahoo and Microsoft would form a dynamic company and more importantly would be a force strong enough to compete with Google on the Internet.




Translation: Here I am stating the glaringly obvious. But don’t you like my use of self-righteous and indignant words like “unconscionable”?

Nonetheless, I must ask: What are you smoking over there on the Left Coast?

When someone dangles more than $40 billion to anyone on Wall Street, we’d throw our mother under the wheels of the bus if we needed to to get it. Frankly, we would do it for $12.43.

In any case, your break with reality is my golden opportunity.

Icahn wrote: During the past week, a number of shareholders have asked me to lead a proxy fight to attempt to remove the current board and to establish a new board which would attempt to negotiate a successful merger with Microsoft, something that in my opinion the current board has completely botched. I believe that a combination between Microsoft and Yahoo is by far the most sensible path for both companies. I have therefore taken the following actions: (1) during the last 10 days, I have purchased approximately 59 million shares and share-equivalents of Yahoo; (2) I have formed a 10-person slate which will stand for election against the current board; and (3) I have sought antitrust clearance from the Federal Trade Commission to acquire up to approximately $2.5 billion worth of Yahoo stock. The biographies of the members of our slate are attached to this letter. A more formal notification is being delivered today to Yahoo under separate cover.

Translation: Gordon Crawford of Capital Research has me on speed dial, for your information. Also, you don’t have Legg Mason’s (LM) Bill Miller to kick around anymore!

Thus, like the good-only-for-pate goose you are, I am going to force-feed the Microsoft (MSFT) merger down Yahoo’s gullet on my terms and remove you from any and all decision-making.



I have bought a ton of your shares, I am going to buy more, I am checking with the Feds.

Check, check, double-check!

And, as an added SuperPoke, my largely unimpressive dissident board slate includes Mark Cuban, whose Broadcast.com Yahoo overpaid for in the last Web 1.0 bubble, giving him the ability to be the loud-mouthed, but highly entertaining owner of sports teams and a dancing fool, I might add, to always remind you that nice guys do finish last.

Nice guy? That would be you. Finish last? You again!

Icahn wrote: While it is my understanding that you do not intend to enter into any transaction that would impede a Microsoft-Yahoo merger, I am concerned that in several recent press releases you stated that you intend to pursue certain “strategic alternatives.” I therefore hope and trust that if there is any question that these “strategic alternatives” might in any way impede a future Microsoft merger you will at the very least allow shareholders to opine on them before embarking on such a transaction.

Translation: Make a move to kiss up to Google (GOOG) any more and I promise I will slap you back to last Sunday, instead of just having a hissy fit like Microsoft CEO Steve Ballmer.

As to AOL (TWX), I have three words, if you try to merge with that dog: An Overwhelming Lawsuit.



Icahn wrote: I sincerely hope you heed the wishes of your shareholders and move expeditiously to negotiate a merger with Microsoft, thereby making a proxy fight unnecessary.

Translation: Wait, I have three more words: Make my day.

Icahn wrote:

Sincerely yours,
CARL C. ICAHN

Translation: First, I am adult who uses all caps when writing my name, as opposed to Yang, who signs letters like a toddler, like this: jerry.

Also, I am not sincere in any way whatsoever and never have been in my entire life.

Except that one heart-breaking time when I was but a wee billionaire activist investor: Rosebud!

]]> http://allthingsd.com/20080515/boomtown-decodes-carl-icahns-letter-to-yahoo/feed/ 0 http://allthingsd.com/20080514/impossible-questions-and-the-10-plagues-of-sunnyvale-for-yahoos-jerry-yang/ http://allthingsd.com/20080514/impossible-questions-and-the-10-plagues-of-sunnyvale-for-yahoos-jerry-yang/#comments Wed, 14 May 2008 16:00:11 +0000 Kara Swisher http://kara.allthingsd.com/20080514/impossible-questions-and-the-10-plagues-of-sunnyvale-for-yahoos-jerry-yang/

In exactly two weeks, Walt Mossberg and I will be hosting Yahoo’s CEO Jerry Yang and President Sue Decker, among others, at the sixth edition of our D: All Things Digital conference.

Of course, there will be a lot of questions for the pair onstage, from either Walt or I, and also the audience (and you can ask your own here to either Yang or Decker or any D6 speaker in text or video), given the incredibly eventful year the much-buffeted Internet company has had.

That got even more eventful yesterday with the news that billionaire activist investor Carl Icahn would decide today whether to enter the fray and wage a proxy fight for the company, entering via the vulnerable position Yahoo (YHOO) has put itself in after not coming to terms with Microsoft (MSFT).

The software giant walked away 11 days ago, after repeated rejections of its unsolicited takeover bid by Yahoo and the blowing of its bluff over price with Microsoft.



Now with Icahn hovering–and there will be more opportunistic investors to come, prompted into action by some of Yahoo’s biggest shareholders, including Capital Research’s Gordon Crawford (don’t say BoomTown didn’t warn you, Jerry)–Yahoo is kind of like a town just whipsawed by a tornado and about to endure a flood.

And then some hail. Also, maybe a locust swarm or two.

Unfortunately for Yang, who also co-founded Yahoo, this 10 Plagues of Sunnyvale ordeal is likely to go on and on and, thus, the questions will not end for a very long time.

And, even more unfortunately, the answer to the most important one he should be asking–what to do now?–is the one that might be now entirely out of Yang’s hands.

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