Daily Archives: July 19, 2008

Legg Mason To Back Yahoo!, Icahn Bid Is Dead

Carl Icahn never really made much of a case for what he would do if he could not sell all or part of Yahoo! (YHOO) to Microsoft (MSFT). He wanted Yahoo! shareholder to support his proxy bid based largely on the hope of an M&A event.

Microsoft never promised Icahn a deal. It was always a "maybe"

Icahn could have put together a detailed operating plan for the existing company, but it might have undermined his argument that the Yahoo! should not stay independent. Basing his move to unseat the Yahoo! board on a one dimensional plan has now cost him the chance of taking the company over.

Legg Mason, which owns 4.4% of Yahoo!’s shares and whose actions are carefully followed by other big stockholders in the company will back the current Yahoo! board at the company’s annual meeting on August 1. Nothing Icahn has said about how he will get a premium value for the portal firm has impressed the money manager, especially because Microsoft has other alternatives, one of which is to buy Time Warner’s (TWX) AOL.

Icahn gambled that Microsoft was a sure thing. It wasn’t and his effort to oust the current board and put in his own will be voted down.

Douglas A. McIntyre

Posted on: July 19, 2008 – 6:44 am in Mergers and Buy Outs, , ,

Apple (AAPL): A Hard Ride Ahead

All the news from Apple (AAPL) is good. Recent Gartner and IDC data show the Mac outselling PC products from Dell (DELL) and HP (HPQ). The iPhone sold one million units in its first three days on the market.

One of the tough issues for Apple is how much it makes on all of those impressive sales. According to Fortune, "Shaw Wu, the top Apple analyst at American Technology Research, is focused on the company’s gross margins, which came in surprisingly low last quarter for reasons that were never adequately explained."

Apple has agreed to stop taking a cut from the cellular subscription fees that it iPhone carrier partners get after they sell the handset. That is bound to make the overall profits on the product something less than impressive.

Apple may have hit the point where it is trading profitability for market share. Pushing the Mac and iPhone harder and harder against entrenched competition has to get harder and harder as the Apple’s market share grows.

Apple’s competition is not going to simply roll over and die.

Douglas A. McIntyre

Posted on: July 19, 2008 – 6:26 am in Consumer Electronics, , ,