Icahn leaves Yahoo! board and takes a bath

Stephen Withers
Tuesday, 27 October 2009 12:53

Your IT - Home IT

After all the posturing, the Yahoo! board reached an accommodation with Icahn. Icahn's slate withdrew their nominations, existing director Robert Kotick withdrew his nomination for re-election, and Icahn voted his stock in favour of the remaining board members.

The board also agreed to appoint Icahn as a director, along with two more members chosen from the remaining members of Icahn's slate and the former chairman and CEO of AOL, Jonathan Miller.

The re-elections were approved by shareholders, and the 'new' board subsequently appointed Frank Biondi (former president and CEO of Viacom) and John Chapple (former president, CEO and chairman of Nextel).

In the end, Yahoo! and Microsoft struck a deal which would see Yahoo! replace its own search engine with Bing, Microsoft handling self-service search advertising sales, Yahoo! selling premium search advertising, and both companies selling their own display ads.

Yahoo estimated that when fully implemented, it would realise $US275 million in cash flow and $US500 million in operating income annually, plus capital expenditure savings of $US200 million.

Microsoft also agreed to pay Yahoo! $US50 million a year for three years to help with "transition and implementation costs", as well as providing an 18-month guarantee on gross search revenue.

Now the deal has been thrashed out, Icahn has resigned from the Yahoo! board, explaining that his attention had turned to other matters. The company has no immediate plans to replace him.

Icahn appears to have dropped a bundle on Yahoo! shares - please read on.