I had blogged earlier about Icahn's role in Motorola. he put pressure on Motorola's Board to make some governance changes. Nearly a week after Microsoft walked away from Yahoo, news emerges that Carl Icahn has amassed Yahoo shares to the tune of about $1 Billion. NY Times reported that:
Mr. Icahn has told associates that he bought as many as 50 million shares of Yahoo — worth more than $1 billion — in anticipation of pressing for seats on its board. He has also inquired at Microsoft, through various friends, whether he could help bring that company back to the negotiating table, these people said. He has received little encouragement, these people said, because Microsoft has insisted that it has “moved on.”
In the case of Motorola, Icahn has been a longstanding critic of the Board and the previous Chief Executive, Ed Zander. In Yahoo's case, it appears that he has not had much involvement or interest before. He is now likely to be a key player at least up until the upcoming Annual Shareholder Meeting on July 3--where most expect Yahoo shareholders to show their displeasure.
I do not think he will be able to get Microsoft to re-engage in the deal but I am sure that he will compel Yahoo Board to explore other strategic alternatives to boost the competitive position (and market value) of Yahoo. I only hope he does not force yahoo to make rash moves that destroys its long-term value while seeking to shore up the stock price in the short term. Yahoo's moves till July 3 will be closely watched and monitored by many shareholders including Carl Icahn. Yang needs to have a compelling story by July not just in terms of what it can do by itself but also announce a set of strategic initiatives with leading firms such as Google, AOL, MySpace and others to convince the shareholders that it has a comprehensive plan to accelerate revenue and profit growth. Otherwise, he will surely face angry rebellious shareholders. Icahn's move is just one more serious pressure on him and his Board.