From The Sip Trunking Experts

TMCNet:  Icahn to Yahoo board: Sell to Microsoft or leave

[May 16, 2008]

Icahn to Yahoo board: Sell to Microsoft or leave

(Canadian Press (delayed) Via Acquire Media NewsEdge) SAN FRANCISCO _ Yahoo Inc. chief executive Jerry Yang spent months fending off Microsoft Corp.'s unsolicited takeover bid. Now he may only have a few weeks to persuade the software maker to revive its last offer of US$47.5 billion, or risk being fired in a shareholder mutiny led by activist investor Carl Icahn.

Spurred on by outraged shareholders, Icahn notified Yahoo Thursday that he will lead a revolt to oust Yang and the rest of the Internet company's board unless they renew negotiations with Microsoft that fell apart May 3 when the two sides couldn't agree on a price.

In a response late Thursday, Yahoo chairman Roy Bostock signalled that the Sunnyvale-based company is prepared to battle the New York financier.

Bostock criticized Icahn for having a ``significant misunderstanding of the facts'' about Microsoft's offer and the Yahoo board's response. He also emphasized that Yahoo remains open to a sale ``if it offers our stockholders full and certain value.''

To pressure Yahoo, Icahn has nominated an alternate slate of directors to replace the current board in an election scheduled July 3 at Yahoo's annual meeting. If the uprising is successful, an Icahn-led board presumably would fire Yang as CEO and try to negotiate a sale to Microsoft.

In his letter to Bostock, Icahn lambasted the board's actions as ``irresponsible'' and ``unconscionable,'' given that Yahoo's stock stood at $19.18 before Microsoft first made its bid. He urged the board to reopen the talks.

``I believe that a combination between Microsoft and Yahoo is by far the most sensible path for both companies,'' Icahn wrote.

Bostock defended Yang and the Yahoo board in his letter to Icahn. ``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,'' Bostock wrote.

To gain leverage in the looming battle, Icahn revealed that he has spent more than $1 billion snapping up 59 million Yahoo shares and options to give him a 4.3 per cent stake in the company. He plans to seek approval from the Federal Trade Commission to acquire up to $2.5 billion in Yahoo stock, including his current holdings.

Icahn's challenge opens a dramatic new chapter in a saga that began Jan. 31 when Microsoft stunned Yahoo with a takeover bid that started out at $44.6 billion, or $31 per share, and then rose to $47.5 billion, or $33 per share, earlier this month.

The showdown now features at least five billionaires with diverse agendas:

Yang and fellow Yahoo co-founder David Filo, who believe Yahoo is worth at least $53 billion; Icahn and basketball team owner Mark Cuban, who has agreed to help shake up the company that made him rich; and Microsoft CEO Steve Ballmer, who, until recently at least, viewed Yahoo as a key weapon in his crusade to topple Internet search and advertising leader Google Inc.

Hoping to seal the deal, Ballmer orally offered to buy Yahoo $33 per share. But Yang and Filo _ speaking on behalf of Yahoo's board _ sought $37 per share, a price the stock hasn't reached in more than two years. The impasse prompted Ballmer to withdraw the bid.

Yahoo shares rose 61 cents, or 2.3 per cent, to finish Thursday at $27.75. That's the stock's highest closing price since Microsoft broke off talks.

While Icahn made it clear he wants Yahoo sold to Microsoft, there are no guarantees the software maker is still interested in buying its rival.

A Microsoft spokesman declined to comment on Icahn's letter, saying the Redmond, Wash.-based company has ``moved on.''

Besides Icahn, the alternate slate of nominees includes Cuban, who sold to Yahoo for $8.1 billion in stock in 1999. Cuban used part of his Yahoo windfall to buy the Dallas Mavericks, a National Basketball Association franchise that he still owns. He called upon Yahoo to sell to Microsoft in a February blog posting.

If Yahoo can't find a way to placate Icahn, the battle threatens to distract Yahoo and the rest of the company's management from their turnaround efforts, said James Post, a Boston University professor specializing in corporate governance and ethics.

``Senior management cannot concentrate on managing the business when they are concentrating on managing critical relationships with angry shareholders,'' Post said.

And there's no doubt Yahoo shareholders are furious, said Darren Chervitz, co-portfolio manager of the Jacob Internet Fund, which owns about 100,000 Yahoo shares.

``There's a strong feeling that Yang and the board did not do their fiduciary duty,'' Chervitz said. ``They had a very strong offer on the table and did everything to brush it aside, if not sabotage it.''

Paulson & Co., a New York hedge fund that owns 50 million Yahoo shares, said Thursday that it will back Icahn's alternate slate of directors if Yahoo's board doesn't negotiate a sale to Microsoft.

Icahn has a long history of challenging corporate boards overseeing troubled companies. Most recently, he has forced major changes at Blockbuster Inc. and Motorola Inc. He also played a pivotal role in the recent $8.5 billion sale of business software maker BEA Systems Inc. to rival Oracle Corp., which dropped an earlier bid of $6.7 billion.

The billionaire investor's other notable nominees to the Yahoo board include: venture capitalist Adam Dell, whose brother, Michael, founded Dell Inc.; and Frank Biondi Jr., the former chief executive of Viacom Inc.

Icahn also recruited two nominees that Microsoft reportedly lined up for a possible hostile takeover attempt that never materialized. Those two are advertising executive Edward Grey and former Nextel Partners CEO John Chapple.

The revolt threatens to jettison Yang, 39, from the company that he started with Filo, 41, while they were graduate students at Stanford University 14 years ago. Together, Yang and Filo still own 134 million Yahoo shares, or nearly 10 per cent of the company.

Yang has argued Yahoo eventually will be worth more than Microsoft's last offer if it can expand its share of a rapidly growing Internet advertising market. He has pledged to boost Yahoo's net revenue growth by 25 per cent in 2009 and 2010 _ well above the company's recent pace of 12 per cent.

``It is irresponsible to hide behind management's more than overly optimistic financial forecasts,'' Icahn wrote Bostock.

Although Ballmer and other Microsoft executives have been saying publicly they don't need to buy Yahoo to bolster the company's unprofitable Internet operations, many analysts have dismissed the statements as posturing.

Collins Stewart analyst Sandeep Aggarwal believes Microsoft will eventually buy Yahoo for $33 or $34 per share. The ``body language from Yahoo and Microsoft do not suggest that both companies have really moved on,'' Aggarwal wrote in a Thursday research note.

If the two companies really abandoned hope for a deal, Aggarwal reasons they would have already announced other moves indicating they were heading in a new direction.

For instance, Yahoo has been discussing a possible advertising partnership with Google for weeks without agreeing to a deal. And if Microsoft weren't still interested in Yahoo, Aggarwal believes the company would have already announced another acquisition or ``radical changes'' in its strategy for building a more compelling Internet search engine.

Associated Press Business Writer Jennifer Malloy in New York contributed to this story.

Copyright ? 2008 The Canadian Press

[ Back To SIP Trunking Home's Homepage ]

Subscribe here for your FREE
SIP TRUNKING enewslettter.

Featured Partner

Featured Whitepapers

SIP Security for the Enterprise
Voice over IP (VoIP) is incorporated into a variety of computer networks, both public and private, and used for everyday transactions and communications among carriers, businesses, government agencies...

Making A Broadband Purchase Decision
Businesses today have many options for broadband connectivity. Clarifying your particular business needs prior to selecting a broadband provider will ensure an optimal match of broadband service to your requirements.

Voice-Optimized Network Delivers Premier Call Experience
Customers equate call quality with business quality. Real-time communication, interpersonal interaction, and the cordial tone of a call center representative can create a positive impression of your business that no email can match.

Featured Case Studies

Business Telecom Expenses Reduced 50%
A small to medium sized company in the midwest was interested in migrating to IP Communications, but in today's economy, they were hesitant to upgrade their communication system due to their perception that the cost would outweigh the benefits.

Multi-State Company Cuts Telecom Costs 50%
A multi-site, multi-state company with extensive monthly long distance fees and toll-free charges did not have adequate broadband for Broadvox SIP Trunking requirements, nor did they have a SIP enabled telephone system.

Discover Leisure Connects Remote Users to its IP-PBX
Discover Leisure is one of the largest resellers of caravans and motor homes in the UK. With 15 branch of?ces all over the country, the company spent a great deal of money every month just on internal phone calls.

Featured eBOOKS

Internet+: The Way Toward Global Unified Communication
Connecting the telephony of the enterprise PBX or Unified Communications (UC) system using SIP trunks instead of conventional telephone lines has been very successful in recent years.

What is SIP Trunking? Edition 2
SIP trunking is becoming more of a focus for service providers. One key issue many service providers face when deploying SIP trunks is NAT, or Network Address Translation, traversal.

What is SIP Trunking? Edition 1
A vast resource for information about all things SIP - including SIP, security, VoIP, SIP trunking and Unified Communications.

Featured Videos

Broadvox VAR Testimonial VAR 1:
Part 1 of the VAR (Value Added Reseller) Partner Program Testimonials for Broadvox...

E-SBCs AS The Demarcation Point:
Ingate's Steve Johnson talks to Erik Linask about the role session border controller plays as the demarcation point at...

Demystifying DPI
How can deep packet inspection protect your SIP traffic as well as your entire network?

Featured Resources

Partner Program Overview:
Over 4,000 VARs, Master Agents, Solution Providers, and Independent IT Professionals trust Broadvox. We offer customized services and solutions to fit seamlessly into any company's business model. And when you partner with Broadvox, every member of our team stands behind you and your customers 100%...

SIP Trunk UC Summit

What's New

Presenting the New Ingate/Intertex Website:
Internet+ is an extended Internet access allowing high quality SIP (Session Initiation Protocol) based real-time person-to-person communication, everywhere and for any application. It applies to both fixed and mobile networks ...

Featured Blogs

Featured Webinars

Secure SIP Trunking:
What You Need to Know

Successfully Deploying Enterprise SIP Trunking:
Tools and Techniques for Overcoming Common Roadblocks

Featured Podcasts

Getting the Most Out of Your SIP Trunks:
Ingate's Steve Johnson and TMC's Erik Linask discuss how best practices forgetting the most out of SIP Trunking services and common pitfalls to avoid.

Featured Datasheets

Ingate SIParator E-SBCs
Adopting SIP is a simple process with the Ingate SIParator, the secure enterprise session border controller (E-SBC). The SIParator makes secure SIP communications - including VoIP,SIP trunking and more - possible while working seamlessly with your existing network firewall.

Ingate Firewalls
Everyone is talking about enterprise usage of VoIP, instant messaging and other types of realtime communications including presence and conferencing.

SIP Trunk Solutions for Service Providers
The award-winning Ingate Firewall and Ingate SIParator deliver a high quality, reliable SIP trunk connection between the customer's IP-PBX and the service provider network, and solve interoperability issues to simplify deployments and support for remote diagnosis of reported issues.