Carl Icahn Increases His Stake in Yahoo!

I'm not afraid to admit that I am fascinated by the Yahoo! story right now.

Here is a company that spurned the aggressive advances of Yahoo! only a few months ago, only to watch their business (and share price) collapse after Microsoft walked away from the table.

Here is a company that had a CEO (Jerry Yang) who wanted to play hardball with Microsoft, and ended up losing (badly). Yang, who used to be the toast of Silicon Valley, quit as CEO after it became pretty obvious that he had lost the trust and confidence of shareholders.

Here is a company that doesn't seem to have any direction right now after being rejected by both Microsoft AND Google. The company is a terrific brand, but doesn't seem to really know what it wants to be. As members of the management team try to figure this out, Google continues to leave the company in the dust, and Yahoo! becomes less relevant by the day.

That being said - the flow of news for Yahoo! just might turn positive over the next few months, and $11.51 might not be that terrible of an entry point. I'm not overly confident about Yahoo's long-term business prospects, however the company has been absolutely beaten down over the past few months. The naming of a new CEO should have a positive impact on the stock's short-term performance.

The first such piece of good news was announced on Friday, when Carl Icahn disclosed that he had increased his stake in Yahoo! Icahn purchased another 6.8 million shares of the company this week, and now has 75.6 million shares of the company.

Carl Icahn has a seat on Yahoo's board and can name two more members of his choosing. Icahn has been very vocal in saying that the company needs a new direction, and you can bet that he will be closely involved in the selection of a new CEO for the company.

Steve Ballmer, the head of Microsoft, has publicly stated that the company is no longer interested in purchasing Yahoo! He has publicly stated though that they are still interested in Yahoo's search business, which certainly leads me to believe that relations between the two companies could thaw considerably with the right person in charge at Yahoo! Ballmer is likely posturing when he says that Microsoft is no longer interested in Yahoo! - I believe that they are, but only at the right price. If Ballmer came out and said that they still wanted to buy Yahoo!, then Yahoo's asking price would immediately go up. By claiming that they are no longer interested in purchasing Yahoo!, Ballmer can help to keep the price of the company low.

Yahoo! as a business is in tatters - however, with Carl Icahn leading the charge for a new CEO, an investment in the company might not be the worst idea right now.

Filed under: General Market News | Internet Companies