Icahn miffed at Yahoo response; Has Google envy too

Icahn miffed at Yahoo response; Has Google envy too

Summary: Another day another Carl Icahn to Roy Bostock letter. In this installment, our activist billionaire is annoyed by the Yahoo chairman's terse response to his previous letter.

SHARE:

Another day another Carl Icahn to Roy Bostock letter. In this installment, our activist billionaire is annoyed by the Yahoo chairman's terse response to his previous letter.

Hmm. Maybe these folks should just pick up the damn phone.

Anyway, here's the letter. You can almost see Carl stomping around as he reads Yahoo's reply.

Dear Roy:

After reading Yahoo!'s press release put out on Friday in response to my letter of that morning, I cannot help but wonder if you even read my letter.

Again, Yahoo! keeps repeating misstatements in the hope it will convince its shareholders that these misstatements are valid. I cannot understand why the Yahoo! board feels so strongly about its "poison pill" severance plan and why it continues to refuse to rescind it. How can you continue to repeat that your severance plan is in the best interests of shareholders and employees? 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? Additionally, a New York paper reported this weekend that "sources close to Microsoft said the severance plan was a 'big issue' when deciding what price they could pay for Yahoo!"

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? Ironically, while you keep inquiring about my plans, it is interesting to note that Yahoo!'s board has been busy reaping great compensation benefits. Indeed, you made approximately $10,000 per week last year -- not bad for a board member. I believe most of your shareholders would be interested in seeing your time sheets -- especially in light of the fact that, in my estimation, most of your so-called "plans" over the last few years have been failures. Remember the old adage -- those who live in glass houses should not throw stones. Perhaps most importantly, under my plan, I would ask the Board to bring in a talented and experienced CEO to replace Jerry Yang and return Jerry to his role as "Chief Yahoo!" It is extremely important to note that Google hired a great operator as a CEO who helped to transform the Company into a giant at the expense of Yahoo! According to publicly available financial information, while Google's income from operations grew 59% per year over the last two years, Yahoo!'s income from operations shrank 21%. What was the board doing over this period? Where was their great "plan"? I believe a new CEO with operating experience might well have had and might still have a very salutary impact on Yahoo! I ask again what your great "plan" has been over the last few years. Why did you permit Google to leave you in the dust?

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?

Sincerely yours,

CARL C. ICAHN

Here's my one hang-up with this latest missive from our chatty billionaire. Icahn notes that Google CEO Eric Schmidt was a great operator before coming to the search giant. Today, you can't argue with the results from Schmidt, but Icahn may be reaching with this Google analogy. I remember many Novell conference calls where master operator wouldn't be used to describe Schmidt. And at Sun, Schmidt was CTO. Operation types aren't CTOs on the side. My theory with Schmidt is that he landed in a dream scenario and a perfect co-management structure with Sergey Brin and Larry Page. Schmidt is on the same wave length as Brin and Page because he's a technologist not because he's an operating chief.

Bottom line: Few other executives could have pulled off that Schmidt-Brin-Page thing and certainly not the operations wonk that Icahn seems to be advocating. Google is run by engineers and that's why the company knocked the snot out of Yahoo. But that little nuance may be lost on Icahn.

Topics: Google, Banking, CXO, Enterprise Software, Legal, Social Enterprise

Kick off your day with ZDNet's daily email newsletter. It's the freshest tech news and opinion, served hot. Get it.

Talkback

24 comments
Log in or register to join the discussion
  • So companies run by engineers always win?

    You wrote:

    Google is run by engineers and that?s why the company knocked the snot out of Yahoo.

    [End quote]

    Are marketing and operations so unimportant?
    Anton Philidor
    • Not at all

      But the game in search was algorithms and Google had that. Yahoo got all hollywood with Semel. Two different approaches, but it's pretty obvious what made more money as the market shifted. My point: Schmidt was the right guy in the right place with the right situation. Marketing and operations are important for sure, but you couldn't bring in some operational type guy that couldn't grasp big technology ideas and expect the Google three headed manager thing to work.

      I doubt Google lightning could strike twice although I'm sure a lot of companies will try.
      Larry Dignan
      • the right guy in the right place with the right situation

        AT THE RIGHT TIME, another BIG important ingredient. Bang on the money!

        Just like Bill Gates was when he was (purportedly) living in a garage. Had he been born 50 years earlier, we may never have had Ma Bell. We may have had, instead, Bill Tel, with an EULA that not only limited the time of a phone call, but who called and who they called for, where they called, how they called, why they called, when they called, how many they called, and how many times they called. Not to mention how many phones were used.
        Ole Man
        • oh, and the phone asks "Are you sure you'd like to make this call?" <NT>

          .
          fr0thy2
        • ...we may never have had Ma Bell...

          "Ole Man" wrote -> Not to mention how many phones were used.

          You're obviously not "ol(d)" enough because back in the day "Ma Bell" *DID* charge by how many phones where on your line. They actually asked you how many phones you had in your house on the line or how many you planned on having when setting up a new account.

          I've never been able to find proof but there were rumors going around that "Ma Bell" would randomly ring a phone number and do a voltage check (this was back when phones had actual bells) to see if what the reading said matched the billing information.
          PollyProteus
          • "Ah, yes, I remember that well" (WC Fields)

            You are right, they COULD tell how many phones one had by the voltage drop on the line when all the phones rang. Unless the "user" were smart enough to take the bells (ringers) out of all the phones except one. (I have been working in electronics since 1959). And you are right. They did charge a "fee" for each phone used (that they knew of).

            Maybe that's where Bill (or his lawyer daddy) got some of his ideas for his EULA, eh? He's not the first shyster to hit the ground scheming.
            Ole Man
        • "Just like Bill Gates was when he was (purportedly) living in a garage."

          What is the origin of this myth of Bill Gates as a self-made man? He was born a millionaire. The only "garage" he lived in was the one attached to his parents' mansion.
          bmerc
          • The only "garage" he lived in was the one attached to his parents' mansion

            That's the one I was referring to, but to avoid argument with a Micro-shill, did not state it as fact.

            Thank you.
            Ole Man
    • it is the power of Linux

      Linux is reponsible for Google's success and missfortune of others like Yahoo and....M$!
      Linux Geek
    • No, but...

      ...company's should be run by people who understand what it is they're selling and non-techies have a hard time understanding tech. Makes as much sense for non-tech to head a tech company as for a non-lawyer to head a law firm (fortunately, the latter is illegal throughout the US).

      As much as I hate to bring up MS in this situation, look at how well they're doing with Steve Ballmer (a marketeer) in charge, rather than Bill Gates (a techie).
      John L. Ries
  • RE: Icahn miffed at Yahoo response; Has Google envy too

    Let me say this again: God Help Us if Icahn takes over. Remember the TWA disaster after he took over?
    marc_90292
    • Not as bad as Lorenzo and Eastern Airlines, but...

      ...TWA no longer exists. 'Nuff said.
      John L. Ries
  • RE: Icahn miffed at Yahoo response; Has Google envy too

    Let me say this again: God Help Us if Icahn gets control of Yahoo. Remember the TWA disaster after he took over?!
    marc_90292
  • Icahn's a money man

    And he appears to be looking at Yahoo strictly as a financial transaction (sell to MS at a fat profit). Furthermore, he cut his business teeth well before the PC revolution, so it's unlikely that he spends much time with computers, much less understands them. Not surprising that he has little respect for tech types and doesn't want one in charge.
    John L. Ries
  • Icahn should buy Yahoo! then.

    Why doesn't he just buy Yahoo! and then he can sell it or give it to Microsoft.
    Randalllind
    • Expensive

      Much cheaper to convince Yahoo's stockholders to elect a new board. Even a relatively small stake like that held by Icahn can be very profitable if the sale to MS is made at the original asking price.
      John L. Ries
  • RE: Icahn miffed at Yahoo response; Has Google envy too

    What is the point of titling your article that way when you are ending your article in this manner?

    Sorry, Larry, but are you into investments? Have you bought Google and short-sold Yahoo!? Come on, its simple to understand, you gotta be neutral. You think too much like a techie who has no clue about investing.
    samunplugged
    • Yahoo is a tech company

      Not just an investment instrument, and as little as financial types (particularly pure speculators) like to admit it, investment decisions and shareholder votes do have significant consequences for people other than investors and corporate executives.

      Since ZDNet's specialty is tech news, I expect them to cover these sorts of stories from the techie's point of view, though maybe a guest column from a financial journalist would be appropriate.
      John L. Ries
      • "consequences for people other than investors "

        "investment decisions and shareholder votes do have significant consequences for people other than investors and corporate executives."

        That's it right there. The crux of the biscuit.

        Anyone who makes decisions that will impact the lives of millions of people solely on the basis of their own short-term benefit is a sociopath.

        Morality is a foreign concept to these scum.
        bmerc
  • RE: Icahn miffed at Yahoo response; Has Google envy too

    The local rag out here in San Jose ran its yearly "what the boss makes" story on Sunday.

    Yang's salary is $1. It's hard to find CEO's who will take that kind of compensation. Most are the Ellison type--"gimme,gimme,gimme!"

    For most shareholders in the US, excessive executive compensation is THE really hot issue.

    Icahn doesn't care about that. He doesn't really care about Yahoo at all. Seems he only bought Yahoo because MS was going to take it over and he wanted to make a killing on his Yahoo stock. And a killing it would be for Yahoo itself.

    Icahn is not the kind of shareholder I would want buying stock in any company I was working for...he's a bloodsucker and only cares about HIS short term profits.
    somewhereinCA