Posted on June 19th, 2008
Billionaire corporate curmudgeon Carl Icahn has started his very own blog called The Icahn Report. Icahn is best known for his money making strategy of buying up shares of a struggling company, forcing his way onto the board, and then demanding changes that suit him before he dumps his shares at a premium. Most recently he has been trying to salvage the Microsoft/Yahoo! implosion by threatening Yahoo! with all kinds of holy hell if they don’t sell.
His blog is certainly full of some good rants. Alternatively, if you’re interested in Carl in some of his funnier moments, Silicon Alley Insider has some videos of him telling humorous stories from his past days. They’re kind of long, but not bad for 72-year-old-corporate-raider-humor.
On the other hand, if you’re interested in Carl at his most terrifying, you can read here about how he made enormous sums of money by shredding TWA into tiny bits and then toying with the floundering remnants of the airline for nearly another decade.
Microsoft has walked from the Yahoo! deal. Michael Arrington has a good rundown on what to expect this week for Yahoo!, but here’s a summary: they’re screwed.
This deal was always the equivalent of Microsoft throwing an armed hand grenade into a crowded room. Everyone knew the grenade was about the go off, but nobody had a clue when it would happen. Would the deal get done at too low a price, forcing Yahoo’s shareholders to sue everyone in sight? Would MS go hostile, costing them and Yahoo lots of time and money? I said in a previous post that there was a huge possibility that key talent would run for the doors leaving Microsoft with nothing for their trouble. Nobody liked this merger, but once the events were set in motion the outcome was inevitably bad for everyone.
Since nothing good would have come for Microsoft from this merger (SAI just started a series titled Why Yahoo-Microsoft Will Be a Disaster), walking from the deal is probably a win for them. On the other hand, this is the the worst outcome for Yahoo!. Shareholders have been angry at their bad performance for years, and many believed this was the only way to get any kind of value out of the company. On Monday, expect the Yahoo! stock price to plummet while Microsoft’s will rise. Oh, and expect a bounty of lawsuits aimed at the Yahoo! board by angry shareholders. Yahoo! turned in a good Q1, but many believed that was smoke and mirrors. If they can’t show continuing improvement, expect even more hell to break loose later in the year.
On the other hand, this could be a new beginning for Yahoo!. Many companies have been tested by failed mergers and come out stronger, like Goodyear in the 80s. But today the Microsoft hand grenade has finally gone off and Yahoo! has a lot of cleanup ahead.
Posted on February 21st, 2008
I haven’t written anything about the Yahoo!/Microsoft deal yet, but this post on TechCrunch sums up some of the problems nicely.
In short, Yahoo! still has some very popular properties, and this is one of the reasons Microsoft feels like the two companies are a match. They can place ads on Yahoo!’s popular sites. Yet the question remains: can Microsoft retain the profitability of these properties given a very ugly and difficult merger? Internet companies are driven by the talent of their people, and without the right leaders providing vision for product, design, or engineering, Internet products can get really stagnant really fast. There’s some stickiness to some of Yahoo!’s products, like Flickr and mail, but customers will switch if they think their platform is dead or dying.
If this gets ugly, both Microsoft and Yahoo! will have a hard time retaining talent. That’s good for competitors, but bad for this deal and the shareholders of both companies. Ultimately, the lesson here is that hostile takeovers of Internet companies are really, really hard because the valuable assets are mostly intellectual and talent related. Microsoft may prove this wrong, but somehow I doubt it.
