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May 15, 2008

Yahoo Taking It From All Sides

Yahoo's having a rough go of it today, with the official emergence of a threat to its board led by investor Carl Icahn, and the usurpation (according to comScore) of its U.S. Web traffic leadership by Google.

In a letter to Yahoo chairman Roy Bostock, Icahn alleged the board "acted irrationally and lost the faith of shareholders and Microsoft," and proposed an alternate board that includes Marc Cuban, Adam Dell and himself. "It is unconscionable that you have not allowed your shareholders to choose to accept an offer that represented a 72 percent premium over Yahoo’s closing price of $19.18 on the day before the initial Microsoft offer." Wall Street Journal has more coverage. TechCrunch has the letter to Bostock.

The goal of a proxy fight would be to consummate a deal with Microsoft, but for that to happen Microsoft would have to go along. That it will is far from certain. Some of the post-collapse speculation and rumor has held that Ballmer & his cohorts had become unsure about the deal were secretly relieved to see it die. However many in the investment community continue to maintain a deal is still possible, if only because Icahn would not have undertaken this move without some indication Microsoft would still be receptive.

Update: Yahoo fired back late yesterday, accusing Icahn of misunderstanding the facts about Microsoft's proposal and how it imploded. Its letter restated Yahoo's position that its board was always open to negotiating a deal and that Microsoft has stated clearly it's "moving on."

Meanwhile the traffic report from comScore is largely symbolic but still painful to Yahoo, which for years has enjoyed the right to call itself the leader of the pack in terms of U.S. reach. According to the measurement firm, both companies possessed about 141 million visitors on their owned and operated sites during the month of April. However it claims Google has an edge, for the first time, of about 466,000 users. Of course comScore's numbers are notoriously shaky and for that reason the finding means very little. For all purposes the companies are locked in close combat for rights to say they have the biggest audience.

Posted by Zachary Rodgers at May 15, 2008 2:21 PM

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