Thursday, May 15, 2008
Can Carl Icahn save Microsoft Yahoo Deal
Finally some good news for the prospect of a Microsoft Yahoo deal. Carl Icahn has got involved and he disclosed yesterday that he has been buying stake in Yahoo. He aims to get into a Proxy fight with the Yahoo Board and force Yahoo CEO Jerry Yang to get onto the negotiation table with Microsoft. This is certainly a good news for deal because If Carl Icahn wants something then generally he gets it.
If you are wondering who the hell is Carl Icahn then keep on reading. Carl Icahn is a billionaire investor just like legendary Warren Buffet. However his modus operandi is opposite of Buffet. Buffet invest in good fundamental companies with sound management team while Icahn invest in companies that are not doing good and have lousy management. Icahn buy enough stake in these companies to put his own men into the Board of Directors of these companies. Then he force the management to change policies, cut costs, lay-off employees and if the management doesn't oblige him he gets rid of the CEO and place his own man in his position. By the time he sells his stake in the company, stock price is already 2 times or 3 times, creating wealth for shareholders and for him in the process.
Carl Ichan is one of the most feared men on Walls Street, the CEOs are scared of him. Once he gets into fight with any management he generally gets his way in by one way or another. He might be bad for the Management and employees of the companies but he is very good news for the shareholders. The moment he discloses he has acquired stake in a company, gives its stock a lift what they on Walls Street calls ‘The Carl Icahn Lift’. He has created more wealth for shareholders than Warren Buffet.
He always reminds me of the character that Michael Douglas played in the Hollywood movie ‘Walls Street’.