It's a busy Monday morning for tech companies on Wall Street, with Apple announcing that over one million new G3 iPhones were sold last week (despite a public relations black eye over a downed Apple server that kept the new phones dark for thousands of new customers). Apple's stock is up five points in early Monday trading and, with consumer spending showing an unexpected rise in June, the new iPhone could be a summer-long blockbuster for Apple.
Elsewhere, there's blood in the water over at Yahoo, although it's hard to say whether it's coming from firebrand investor Carl Icahn or Yahoo CEO Jerry Yang and his siege-weary board of directors. Over the weekend, the board turned down a purported $2.3 billion "take it or leave it" offer from Microsoft for Yahoo's internet search business, and Icahn isn't happy about it. The money is the estimated advertising income Yahoo would earn over the next five years.
This morning, Icahn filed a proxy to nominate a slate of nine directors to replace the Yahoo board and chief executive Yang after the board gave the thumbs-down to the latest Microsoft offer. Says Reuters this morning "Icahn, who owns about 5 percent of Yahoo and is working with Microsoft, reiterated earlier statements that Microsoft Chief Executive Steve Ballmer was no longer willing to negotiate with Yahoo's current board."
Parts of Icahn's letter were written in bolded capital letters, signaling that either the billionaire investor's patience with Yahoo is at an end or that he doesn't comprehend written communication etiquette - probably both.
"We believe that NOW IS THE TIME TO ENTER INTO A SIGNIFICANT TRANSACTION WITH MICROSOFT," says Icahn in a letter to Yahoo shareholders. He also dangled a sweet carrot under the noses of Yanhoo investors, pretty much stating that his board would get a lucrative deal done with Microsoft. "Icahn told shareholders that he "strongly" believed that if his slate was elected, Microsoft would be willing to present Yahoo shareholders with either a "purchase offer for the whole company or a very attractive offer to purchase (Yahoo) 'Search' with large guarantees," says the Reuters dispatch.
Whatever the case, Icahn is ticked off. He claims that Yahoo "distorted" the facts regarding a proposed acquisition of parts of Yahoo by Icahn and Microsoft. For its part, Yahoo's current board says the latest Microsoft offer would have dismantled its Internet franchise.
The board also said it was given less than 24 hours to respond to the offer. Said Yahoo Chairman Roy Bostock, "It is ludicrous to think that our board could accept such a proposal. While this type of erratic and unpredictable behavior is consistent with what we have come to expect from Microsoft, we will not be bludgeoned into a transaction that is not in the best interests of our stockholders."
So the stage is set for another street fight between Icahn and Yahoo. The showdown should come August 1 when the Yahoo shareholders' meeting is set to take place. Icahn should get his proxy vote then. But whether or not he gets his way is up in the air.
My bet? Right now, I'd say he loses. It's an uphill fight and his crude communication skills aren't winning over the independent shareholders he needs. But it will be close, and Icahn still has two weeks to make his case.