In a letter which basically called Carl Icahn a dummy, Yahoo! (YHOO) responded to the billionaire’s plan to offer an alternate slate of directors by writing that his understanding of the portal company’s M&A negotiations "reflects a significant misunderstanding of the facts."
The letter was has two core arguments. The first is that the board offered a legal defense of its fiduciary actions by saying it has met twenty times to talk about the offer from Microsoft (MSFT). Then the board made the point that, based on Yahoo!’s future prospects, the company is worth at least $37 a share. It traded at about $19 before the Redmond approach.
The response is terribly flawed but reflects all that the Yahoo! board can say. The reality of the situation is that it does not matter how many times the board met or how many projections it reviewed. No one outside the board and senior management believes that there is any case for a valuation for Yahoo! that is above $30 or so, and that is only to Microsoft, which wants it for strategic reasons.
No other company made an offer for Yahoo!. If Icahn fails and Microsoft does not return, the stock will move back toward $20. That is the only part of the present situation which is crystal clear.
Douglas A. McIntyre
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