Thursday, June 5, 2008

Icahn! No You Cannot!

Are you old enough to know what 'greenmailer' means?

Greenmailer like Carl Icahn.

They buy shares in a company they think is undervalued and that the Greenmailer have mythical abilities to 'unlock the values' for the poor, beaten, ignored, er... undeervalued shareholders.

How Do They Do It...? (Is a show that brings us to the factory floor making stuff we eat, use, and abuse.)

Greenmailers (...blackmailer) raise a ruckus to force a company to sell unprofitable bits of the company to raise share prices so they, the greenmailers, can cash out. Regardless the effect the sale will have on the company's future.

Failing that they turn up the volume from 'Annoying' to 'Shrill' to force companies they are blackmailing, uh... I mean, greenmailing to buy back their shares at a secret-higher price wrapped in a 'back-slapping, we're friends now, we're happy apart' press release.

Do they bring any value, expertise to the company.

None. Nada. Zip. Zilch.

Kirk Kerkorian could not strong arm GM into a shotgun wedding with Renault or get GM to buy him off. By some accounts Kerkorian got away lucky with a little profit. Other accounts said he lost money.

Icahn succeeded with Motorola. Now Motorola is spinning-off its cellphone unit and hoping for a buyer. Problem is, the cellphone part of the company is so bad and, probably, so demoralized, not even Chinese companies hungry for a brand wants anything to do with it.

Ed Zander entered Motorola's cellphone business in a race for the bottom. He undeservedly got credit for RAZR but he deservedly got credit for ruining Motorola's cellphone business. Ed Zander was rightly thrown out of Motorola but it was too late.

As an aside, Sun must be feeling lucky that Ed Zander left them.

Back to Icahn and Yahoo.

Icahn wants Microsoft to buy Yahoo so he can make money. Now.

That window of opportunity has closed with Yahoo resurgent (for now) and Microsoft finally decided to face its Vista problems (rather than distracting everyone else with a lame brain bid).

What needs to happen for Icahn to get his way?

Yahoo needs to stumble badly, over two quarters, and Ballmer feels the pressure to lift Microsoft's stagnating share prices and Bill Gates to busy to notice his friend Baldy Ballmer is drowning.

Then Icahn can herd his prey (yes that includes Microsoft, the sucker who buys a sucky company) into a corner and go for the kill.

By the way, Icahn should not say that Jerry Yang is only interested in keeping his job. I doubt that. Yahoo is his baby.

Whatever happens 12 to 18 months down the road, I still think it is a terrible terrible deal for Microsoft.