Search Engine Optimization News Blog

In a surprising turn of events, Carl Icahn agreed yesterday to call off his proxy fight against Yahoo - in exchange for seats on the board. One for him, one supposedly for former AOL exec Jonathon Miller (recommended by Yang), and a third for another director to be chosen from Icahn’s stable.

This directly after another large stockholder, Legg Mason, jumped in on Yang’s side of the fight late last week. It is widely speculated that either Icahn saw his chances of a successful board overthrow dwindling, and jumped at the chance to insinuate himself into the board, or else that it is a perfectly viable solution to him allowing him a guaranteed say in further negotiations and the chance to push for a deal with Microsoft from the inside.

The stockholders meeting on August first may be a trifle anticlimactic ( all those proxy cards, what a waste) but at least it’s over - for now. Knowing Icahn, there will be waves in the future.

Jonathon Miller is an intriguing candidate for a board spot, having left AOL under a cloud of rumor and conflict right as revenue started to rise. Ousted from Time Warner prior to a massive restructuring of AOL, Miller became a partner at Velocity Interactive Group, a venture capital firm. Yang must see something in the strategist to feel he would be a good addition to the Yahoo board, and Icahn seems agreeable.

Three seats will by no means give Icahn control of the board, but at this stage in the game perhaps he feels the tide has turned, and it is the best he is likely to get. Icahn has proven over and over that he is a force to be reckoned with, and it remains to be seen how much influence he will be able to wield once firmly entrenched within Yahoo’s inner circle.

Carl Icahn, the billionaire with a past record of hostile takeovers and proxy fights, appears to have definite ideas about the value of Yahoo and what should be done with it. Icahn bought up 50 million shares of Yahoo earlier this year in an attempt to overthrow the current board and inplement his own vision of selling the company to Microsoft.

Icahn controls close to 5% of the stock, and has every intention of duking it out until the stockholders meeting in August. His heavy campaign to get stockholders to vote his ticket and install a new board is premised on his assurance that he can personally broker a deal with Microsoft’s Steve Ballmer.

However, there is resistance from an unexpected quarter. Another major stockholder has entered the fray, this time on the side of Yang and the current board members seeking to stay seated.

Legg Mason Capital Management has a collective interest in Yahoo to rival Icahn’s, and they don’t want Icahn in control. In fact, the CEO of Legg Mason, Bill Miller, pledged support to the current board, and urged others to do the same.

Yahoo has been seen as increasingly desperate over the ensuing months, as negotiations with Microsoft became heated and the partnership with Google was being hammered out. Some investors were incensed at the refusal of Microsoft’s offer, though others remain staunchly convinced that an independent Yahoo makes for a more competitive market.

The partial merging of Yahoo’s ad market with Google’s raised some eyebrows, but it is still in limbo awaiting approval from the powers that be. Out of sight, out of mind! Is this the chance Yahoo has been waiting for?

With Legg Mason’s support, it wouldn’t take much more to tip the scale solidly in Yang’s favor, and ensure the seated board more time to entrench their positions.

In a reply to the latest Icahn / Microsoft offer, Yahoo turned it down almost immediately, citing the ‘one day only’ offer to be almost an insult. The Icahn / Yahoo battle reached new heights of hysteria in the latest exchange via letters to the stockholders - Icahn continues to maintain that Yang does not have their best interest at heart, whereas the current board responds that Icahn has no true idea what he’s doing.

In the middle lies the presumption that by partnering with Google, Yaho has managed to remain independent.

What is Icahn’s next move? He seems content for the moment taking potshots at Yahoo through various platforms, but his vision for Yahoo may turn out to be just that.

Icahn and Microsoft are openly in cahoots now, as the stockholders’ meeting looms imminent. Proposal after proposal is being fired at yahoo, apparently with the sole intent of being turned down. Then the corporate mogul and Redmond software company can roll their eyes and say how they are trying so hard to come to a reasonable agreement - but Yang just won’t play.

Yang and Bostock, on the other hand, steadily hold to their stand that any type of deal on Microsoft’s terms is no deal at all. The wholesale buyout that didn’t happen at $33 a share is most certainly not happening at less than that, and why should a sale of Yahoo’s search business even be considered?

A far more lucrative deal with Google is already inked, and is pending enactment as soon as the vetting by federal and state eyes is completed. Icahn says the partnership with Google was a calculated plot devised for the sole purpose of defeating a Microsoft takeover by making Yahoo a less palatable target.

Another letter to Yahoo shareholders went out yesterday, in which they are exhorted to ignore Icahn and his ‘no-plan’ for Yahoo, and vote the white proxy card come August first. It concludes:

“The choice for Yahoo! stockholders is clear: turn your Company and its uniquely valuable combination of assets over to Carl Icahn and his nominees and allow Microsoft and Mr. Icahn to dismantle the Company and deliver our search business to Microsoft on terms that would be disadvantageous to Yahoo! stockholders, or re-elect your experienced and dedicated Board with a clear strategy and a demonstrated commitment to create value for Yahoo! stockholders. We are prepared to let you, our stockholders, not Microsoft and Carl Icahn, decide what is in your best interests and we look forward to the upcoming vote.

We strongly urge you to vote your WHITE Proxy Card today for your current Board of Directors.”

In the middle of the battle is Yang - he’s going to need a stroke of luck if he hopes to weather the storm unscathed. The multitude of new programs and deals made over the past weeks could be in jeopardy with a change in management, and Yang appears to be holding onto the hope that this fact will raise a desire to keep the board stable.

For what it’s worth, good luck, Mr. Yang!

Yahoo may be making a serious error in launching so many new projects so close to the much anticipated shareholders meeting - or is that part of the current board’s plan? Get the ball rolling in so many areas at once that a strategic change in the existing power structure will be looked on as foolhardy?

The newest grand plan to be rolled out is an addendum to Yahoo’s Open Strategy that might outstrip all expectations - emphasis on might. The capability is there, but it remains to be seen if the idea will take off as quickly as hoped.

The capability to invent your own search products has always been available, but this is the first time such a wide scale model has been introduced as a possibility for the average webmaster.

The self serve API is designed to allow unlimited queries, attribute free presentation, re-ranking ability with a wide flexibility allowing a better user interface in each search experience and vertical access for specific applications.

The usage restrictions have been scrapped, and this will allow developers with smaller investment resources to have a chance at creating their own vision.

Of course, Yahoo hopes to monetize BOSS with an influx of advertising, and several larger search engines are already set to go, including Me.dium, Hakia and Cluzz.

The social aspect of the whole project has been pushed hard - the hope is that this will be the new and improved blended search with the ability to overlay results from the major social networking sites, and suit the needs of the generation after X.

The idea behind multiple search engines is not new, but until now was out of reach due to the staggering investment involved. The technology, the infrastructure - with the big three already so well established, it was a losing game and the market seemed closed.

With the ability to piggyback on Yahoo’s search API, the run of the mill techno-nerd will be able to bring to life their own personal vision of what a search experience should be. The possibilities are endless, though it remains to be seen how many will actually take advantage of the opportunity.

Does Yahoo hope that the advent of hundreds of ‘mini-engines’ will chisel away at the mighty Google? And will this board even be around to see what happens?

Is Jerry Yang ready to step away? Or will he be dragged kicking and screaming away from the shaky edifice that is Yahoo?

Many seem to think that the onetime chairman should step down as CEO and return to the job he arguably did very, very well - and to do so before the shareholders take the decision out of his hands on August first.

Yang has been a dynamo these past few weeks - the deal with Google, negotiations with NewsCorp and MySpace, and a finalized partnership with Time Warner to handle search based sports advertising. Does he hope he can sway the vote, and keep his position as CEO?

Most think that a move for a ‘half and half’ board is likely to be made, barring a full out takeover by Carl Icahn’s group, but either way, Yang is not expected by most to survive the meeting with his position intact.

Wouldn’t it be a trip if he managed to pull it off, and keep his job!

Meanwhile Microsoft is still ticked off, and looking into other avenues to blow off pent up takeover frustrations.