Kara Swisher

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Yahoo Boardroom Brawl?

Will there be a mano-a-mano in the Yahoo boardroom about what to do about the moribund stock at Yahoo, as the company moves closer to its annual meeting on Aug. 1?

If major shareholders have anything to do with it, there will be.

Naturally, big shareholders are uniformly irked at the Yahoo (YHOO) board and, specifically, CEO Jerry Yang, as the share price has drifted down to around $23 a share, ever since Microsoft (MSFT) walked away from its acquisition bid in early May.

Since having a $33-per-share clean offer from the software giant in their grasp, most are looking askance at Yang and the current directors and are not inclined to back the team as the one to return Yahoo shares up above that.

So, according to several sources close to the Yahoo board and also major shareholders, there has been increasing pressure from these investors on the board to become more decisive about Yahoo’s future.

While Yang has been lobbying them recently, largely blaming Microsoft for the trouble, many seem to be growing weary of the drama.

Thus, one major plan: To divide and conquer Yahoo’s board.

That might not be so hard, given not all Yahoo board members are apparently created equal, with some having been quite active in the botched takeover situation with Microsoft and the decision to partner with Google (GOOG) on a limited ad-outsourcing deal and others not so much.

What one major shareholder is considering is focusing on unseating several of the board members most involved in the Microsoft negotiations–specifically Chairman Roy Bostock, Gary Wilson and Ron Burkle–in order to change the board without changing control, which might trigger Yahoo’s pricey severance plan.

“If we can handpick the ones to vote out, it might be easier,” said the investor. “There are a lot of voices on that board that don’t get heard enough and need to.”


Interestingly, the once-noisiest shareholder–billionaire investor Carl Icahn (pictured here as a LOLCat), who is still waging a proxy fight against Yahoo and never met a poison pen he did not employ–has gone relatively quiet of late, except for saying he thought the Google deal might be OK.

People who have spoken to him on the subject say he was pushing for that deal, mostly in an effort to put a real scare into Microsoft about Google’s inroads into Yahoo in order to get them to bid for the whole company.

Icahn has maintained that buying Yahoo whole is a strategic imperative for Microsoft and that it cannot walk away, even though it seems to have largely done just that.

Still, Icahn is entirely correct that Microsoft is unlikely to make much headway in the online ad space without a big move like buying Yahoo or perhaps AOL (TWX).

As one former Yahoo exec noted, Google’s dominance of the search and search-ad business makes it hard for Microsoft to compete there, although there are other arenas where the company can win.

“An advanced state of learning, the scale, the additional experimentation, the risks and rewards [that] Google is getting make it impossible [to compete],” said this person.

“I liked the MicroHoo concept, sans massive integration risk, because the display, video and audio game is still up for grabs… and MicroHoo has different and equally valuable assets as does Google, and that opportunity is huge.”

Some Yahoo shareholders hope Microsoft sees the wisdom in that kind of thinking.

Said another major Yahoo investor, “the only thing to do now is to try to convince Microsoft to either make a better search offer and maybe even another bid and get a board in place that will welcome that overture.”

Well, hope does spring eternal.