As if Ballmer weren’t enough, now Yahoo’s got to deal with Icahn

by Jeff Dorsch, June 2nd, 2008, 7:00 am

Unless Jerry Yang and Steve Ballmer secretly got together at an airport again over the weekend, the fate of Yahoo! still hangs in the balance.

Since the proposed takeover by Microsoft spectacularly fell apart last month, activist investor Carl Icahn has been accumulating shares in the company (along with his oil-patch sidekick, T. Boone Pickens), Google has made noises about pursuing a closer relationship with Yahoo!, and Microsoft (perhaps frightened by Google’s overtures) has returned to the bargaining table to discuss some kind of deal with Yahoo!, short of an outright merger.

Yahoo! CEO Jerry Yang, speaking at the D6 conference last week, suggested that the months-long kerfuffle over Microsoft’s takeover bid clarified his company’s need to remain independent. What’s less clear, however, is how Yahoo! will do so.

Yahoo! postponed its scheduled annual meeting to late July, after Icahn bought a 4% stake in the company and proposed 10 nominees for the Yahoo! board, opposing the management-appointed slate of director nominees. (Among the Icahn nominees is Mark Cuban, the owner of the Dallas Mavericks, who would make Yahoo! board meetings noisier and possibly more interesting if he is elected.)

The prospect of Icahn gaining control of Yahoo! is scarier than Google or Microsoft buying the company. As shrewd as he is in pressuring companies to make changes that increase value for shareholders (including himself), Icahn is no visionary manager of corporate enterprises. He’s in the game to make a quick buck, and there’s nothing wrong in that. He’s the ultimate in opportunistic investors, keying in on vulnerable corporations. He usually makes money for himself and fellow shareholders, but the aftermath of his “crusades” is often devastating for other parties. Just ask anyone at Motorola, or anyone who worked at Motorola until recently.