Monday, June 09, 2008
The Only Laugh-Out-Loud Letter from a Corporate Raider You Will Read This Week
The phrase “laugh-out-loud” is one of the most over-used phrases in our lexicon, particularly in its text-message abbreviation form: “LOL.”
We use it mainly—let’s be honest here—to respond to something that was either mildly amusing or not funny at all, because we don’t want the person who sent the mildly amusing or not-funny-at-all message to have their feelings hurt.
So we write “LOL” and move on.
Occasionally, however, we here at NotMakingThisUp stumble across something that causes us to literally “laugh out loud.” And it occurred this weekend while reading Carl Icahn’s latest fiery epistle to the Chairman of the Board of Yahoo.
Icahn is, of course, the famed corporate raider who rode the credit bubble maybe a bit too long and seems so desperately to want Microsoft to take him out of his humungo position that he actually provided a price ($34.375) that he thinks Microsoft should bid, and Yahoo should take.
Now, we know what you’re thinking.
You’re thinking, “Hey, there aren’t a whole lot of letters from corporate raiders circulating these days, so how is this one going to stand out as ‘The Only Laugh-Out-Loud’ letter I will read this week?”
We have no answer to that, other than we like nominating things on a weekly basis, and we think you might laugh-out-loud too.
Herewith the relevant excerpt from the letter from Carl Icahn to Yahoo Chairman Ray Bostock, which can be quickly found on the Wall Street Journal’s web site.
See if you can spot the “LOL” moment:
You asked, "what exactly would happen to our Company if you and your nominees were to take control of Yahoo!" I will give you my perspective on that.
• First, I would work to have the board replace your "poison pill" severance plan with an acceptable alternative.
• Second, I intend to ask our new board to hire a talented and experienced CEO (attempting to replicate Google's success with Eric Schmidt) to replace Jerry Yang and return Jerry to his role as "Chief Yahoo".
If you said “It’s the part where Carl wants to ‘replicate Google’s success with Eric Schmidt,’” you are right.
While Eric Schmidt is certainly far more intelligent and a good sight more rich than most people on this planet, including us, could ever reasonably dream to be, the notion that Eric Schmidt is responsible for the success of Google—as opposed to hanging on for dear life while the rocket ship he attached himself to was beginning to lift off the launch pad—is one indication that Carl Icahn may not have performed more research on this search business thing than, oh, my dog Charlie does when he sees a squirrel zipping across the lawn and the neurons in his brain begin telling his leg muscles that what he should do is drop whatever he is doing and chase that thing with the furry tail even if the squirrel is heading into rush-hour traffic on I-95.
As anybody with a passing knowledge of the history of Google knows, by the time the venerable Doctor Schmidt joined Google, in March 2001, Google was well on its way.
Schmidt said it himself in an August 2001 interview with CNET News.com that is easily available to anybody—even corporate raiders—who bother to Google “Eric Schmidt.”
Q: Strategically, how do you envision Google's future?
A: Things are going pretty well right now. One of the board members called me up and said, "Congratulations, don't screw it up." They were joking, of course, but my point here is that Google has done extremely well since it was founded. And I was brought in to help it grow. I'm used to the problems of growth. I don't anticipate any significant strategic changes.
Yahoo at this stage in its corporate life is not exactly looking for someone to “not screw it up” and deal with "problems of growth."
Yahoo is a turnaround.
In fact, Yahoo is more akin to, say Novell—the venerable networking company that fell on hard times after Microsoft went after its core business. In March 1997, Novell hired a new CEO to implement a turnaround.
That CEO was—you probably guessed where this is going—Eric Schmidt. Novell share price in March 1997? Around $10. When Eric Schmidt left Novell in early 2001? Around $5.
While Eric Schmidt has done a terrific job keeping the Google rocket ship in a fairly steady orbit for the last seven years, he had about as much to do with the core initial success of Google as, well, Carl Icahn cares about what really happens at Yahoo aside from getting a nice fat bid for his stock.
Which is why his letter is the only Laugh-Out-Loud letter you will read from a corporate raider this week.
I Am Not Making This Up
© 2008 Not Making This Up LLC
The content contained in this blog represents the opinions of Mr. Matthews. Mr. Matthews also acts as an advisor and clients advised by Mr. Matthews may hold either long or short positions in securities of various companies discussed in the blog based upon Mr. Matthews' recommendations. The commentary in this blog in no way constitutes a solicitation of business or investment advice. In fact, it should not be relied upon in making investment decisions, ever. It is intended solely for the entertainment of the reader, and the author.
Posted by Jeff Matthews at 7:50 AM