People Search Digest

Will the Shakespearean drama that is the Yahoo-Microsoft merger ever end? Not if Carl Icahn has anything to say about it. As you may recall, Icahn is the bullyish investor who advocated a total takeover of Yahoo’s board following the breakdown of Microsoft merger talks. Though Yahoo rebounded from its ill-fated affair with Microsoft by jumping almost immediately into bed with Microsoft enemy number one Google, it seems that Icahn still hasn’t finished using his scorched earth tactics to beat Yahoo CEO Jerry Yang over the head with the power of his 4% share of Yahoo stock.

Icahn announced recently that he had been in private talks with Microsoft CEO Steve Ballmer about re-opening negotiations with Yahoo, which Ballmer agreed to do, provided that Yahoo completely overhaul its board of directors. Though these backdoor conversations have people paying attention to Icahn again, it’s very unlikely Microsoft is still interested in purchasing Yahoo for its original offer. Why buy the cow, after all? But as Michael Arrington at TechCrunch wrote, ‘Microsoft may now be eager to merge with Yahoo, not in the interest of healthy competition in the search engine biz, but for the thrill of humiliating the board of directors that rebuked them in the first place.’ Talk about a jealous ex.

But Icahn, for all his bluster, hasn’t won the day just yet. Among his handpicked potential board of directors is Bill Miller of investment firm Leggs Mason. Miller has yet to commit fully to Icahn’s plan, telling a Reuters reporter that he would be more enthused if Icahn promised that Yahoo would not be sold for less $31 a share. In other words, simply selling the company to Microsoft is not good enough, considering the fact that a vindictive Microsoft will most certainly lowball Yahoo the second time around. Icahn has yet to deliver a concrete figure the board of directors can hang their gold plated hats on.

For Yahoo’s part, Jerry Yang has come out against the tactics employed by both Microsoft and Icahn, asserting that he can lead the company back to the stability that has been compromised by this merger fracas. Yang, however, has more pressing problems of his own: in three weeks time he’ll be facing a vote of confidence in front of the same beleaguered board of directors in question now.

Assailed on all fronts and bleeding executives, Yahoo is currently in a very precarious position. In a sense, the fate of Yahoo is the fate of the search engine model. Whether it is sold off piecemeal to Microsoft or wholesale to Google could determine what the new steps in search technology could be and who will dominate the next era in web development. Whatever happens, anyone even vaguely interested in Internet technology is glued to their RSS feed right about now.

By Mariana M.