The IT Nerd

Yahoo must have been really ticked off at Carl Ichan’s last salvo to put out a press release that only says the following:

“Leaving aside Mr. Icahn’s inaccurate interpretation of our retention plan, we again note that he has no credible plan to operate Yahoo!. We believe that Mr. Icahn’s suggestion that we cancel our retention plan would have a destabilizing impact on Yahoo! and would clearly not be in the best interests of our shareholders. Furthermore, his suggestion that we put out a price publicly to see if Microsoft will alter its stated position is ill-advised. As we have stated numerous times publicly and privately, we are open to any transaction including a sale to Microsoft if it is in the best interests of shareholders”

That must not have sit well with Ichan as he fired back this morning. First he talks about the severance plan:

“Indeed, Yahoo!’s own compensation advisor called the severance plan “nuts.” Is it not true, as the shareholder complaint stated, that Microsoft’s CEO earmarked $1.5 billion for employee retention (a benefit you neglected to tell your employees about)? Is it not better to incentivize employees to stay in their jobs than to quit? Instead of just continuing to repeat the mantra that we have made an inaccurate interpretation of your severance plan, why do you refuse to go into detail as to why our interpretation is incorrect?”

Then he talks about Yahoo’s last press release:

” In your press release from Friday, you stated again that I do not have a credible plan for Yahoo! Did you even bother to read my letter, which went into great detail on what measures I would ask the new board to take?”

To top it off, he calls them out:

“I outlined a number of questions in Friday’s letter. Why don’t you do me the courtesy of answering my questions as I have answered yours?”

So it’s clear that this war of words is escalating further. One wonders if this will continue until the August 1st board meeting, or will something happen sooner. Whatever happens, it’s bound to be entertaining to all but the employees of Yahoo and the two sides in this war.

In a clear attempt to keep staff from bolting to Google inform employees about the upcoming proxy fight with Carl Icahn, Yahoo CEO Jerry Yang sent an e-mail to his staff. Besides explaining the process, he said the following:

“we believe the yahoo! board has the independence, knowledge and commitment to navigate the company through the rapidly changing internet environment and to deliver value for yahoo! and its stockholders. as we’ve said repeatedly, the entire yahoo! board is fully committed to doing what is in our stockholders’ best interests. as yahoos, it’s more important than ever that we put aside the rhetoric and continue to focus on strategic objectives and our efforts to maximize stockholder value. i want to thank all of you for your continued hard work and dedication through this distracting time. you are our most valued asset.”

It would be interesting to see how many Yahoo employees are actually leaving because of the Yahoo/Icahn battle. Anybody inside Yahoo want to leave me a comment and let me know?

The war of words between Carl Icahn and Yahoo Chairman Roy Bostock is really getting ugly. Icahn has fired off another letter to Yahoo, that starts with the following line:

“While you may take issue with the content of my letter, I take issue with your oversight of Yahoo! Again, I stand by my characterization of your “poison pill” severance plan and I find it humorous to see you attempt to defend it.”

Ouch! That’s a bit of a bitch slap. But it gets better:

“You asked, “what exactly would happen to our Company if you and your nominees were to take control of Yahoo!” I will give you my perspective on that.

— First, I would work to have the board replace your “poison pill” severance plan with an acceptable alternative.

— Second, I intend to ask our new board to hire a talented and experienced CEO (attempting to replicate Google’s success with Eric Schmidt) to replace Jerry Yang and return Jerry to his role as “Chief Yahoo”. Indeed, it was much speculated that Jerry would serve in the CEO role temporarily until a permanent CEO was hired after the board asked Terry Semel to resign.

— Third, I intend to ask our new board to inform Microsoft that unless any alternative transaction can insure a $33 or higher stock price (of which I am skeptical) all talks of alternative transactions are over.

— Fourth, I will ask our new board to offer publicly to sell Yahoo! to Microsoft in a friendly and cooperative transaction.

— Fifth, to the extent Microsoft does not want to make a proposal, I will ask our new board do a deal on search with Google, but only if it contains termination provisions that would in no way impede a subsequent acquisition by Microsoft.”

So much for Yahoo saying he has no plan. I guess that we’ll just wait for Yahoo to respond with a tactical nuke or something. It’s truly gotten that ugly.

Yahoo Chairman Roy Bostock and Carl Icahn traded shots at each other over the last couple of days. Icahn for one sent a rather inflammatory letter to the Yahoo board. In it he basically accuses Yahoo of creating the severance plan that I have previously reported on to act as a poison pill:

“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.”

Come on Carl, don’t hold back. Tell us your true feelings on this issue.

Yahoo Chairman Roy Bostock clearly didn’t like that, so he fired a few shots of his own:

“Conspicuously absent from your letter is any credible plan for Yahoo! other than a repetition of your insistence that the Company should sell itself to Microsoft. Indeed, your stated view that “the only way to salvage Yahoo! in the long if not short run is to merge with Microsoft” demonstrates that you have no other plan and causes one to wonder what exactly would happen to our Company if you and your nominees were to take control of Yahoo!.”

I’ll translate that paragraph for those of you who don’t get corporate-speak. He’s saying “You have no clue. FOAD.”

The war of words is likely to continue until the company’s general meeting on 1 August. That’s when I expect guns and bombs to come into play.

Yahoo didn’t waste any time in shooting back at Carl Icahn. Roy Bostock, chairman of Yahoo posted this letter responding to Icahn’s attempt to oust the board. Of note, is the fact that it tries to counter Icahn’s accusation that the board didn’t do it’s job in terms of folding up like a cheap suit accepting the Microsoft offer. It references the fact that the offer from Microsoft wasn’t high enough:

“This was communicated to Microsoft in-person at a meeting in Seattle on May 3rd. With Microsoft’s offer at $33 and Yahoo!’s counter-proposal at $37, Microsoft elected, within hours, to walk away from the negotiating table and informed us that they were “moving on,” having never engaged further on price or any of the key non-price deal terms.

In short, Yahoo!’s board was at every point in this process prepared to enter into a transaction with Microsoft that would maximize stockholder value–and included certainty of value and closing. What Yahoo!’s independent board refused to do was to allow control of this company to be acquired for less than its full value.”

Bostock also said that Yahoo!’s business continues to perform well and the board continues to look at other ways to line their pockets with cash maximize shareholder value. He closed by saying:

“We continue to believe that Yahoo!’s current board has the independence, the knowledge, and the commitment to navigate the Company through the rapidly changing Internet environment and to deliver value for Yahoo! and its stockholders.“

I’m guessing that’s business speak for “we’re right, you’re wrong, FOAD.”

Your move Carl.

Carl Icahn is ticked off with Yahoo’s board for not selling out accepting Microsoft’s takeover offer. So he’s launched a proxy battle to oust the board of directors:

“I believe that a combination between Microsoft and Yahoo is by far the most sensible path for both companies,”

Just to prove that he’s not blowing smoke, he’s dropped a BILLION DOLLARS on Yahoo stock and wants the FTC to give him the right to buy up to $2.5 billion worth of stock.

Basically, this means that Jerry Yang and his buddies on the board are likely screwed. Perhaps that’s why he was so anxious to talk to Microsoft after Steve Ballmer pulled their offer. Oh well, he can always cash out and retire rich seeing as he’s worth $2.3 billion.