How Peanut Butter Lured Icahn to Yahoo!

In January 2007, I launched an Internet-based activist campaign encouraging frustrated Yahoo! shareholders to pool their shares with me in order to speak with one voice and push the company for significant changes in its board and management.

People immediately started "pledging" their shares towards our group. By last year's annual meeting, we had 100 shareholders with 2.1 million shares of Yahoo! stock. We ended up getting a lot of press and spoke to many large institutional holders encouraging them to vote against a significant number of the directors at the meeting. CEO Terry Semel stepped down 6 days after the vote.

Although most shareholders were pleased to have Jerry Yang take over as CEO last summer, he was slow out of the blocks and basically followed the path Semel had been going down. At his first analysts' call last July, Yang announced he needed 90 days to study the company from top to bottom before making changes.

Three months passed without acknowledgement. No news was bad news and Wall Street headed for the exits. Yahoo!'s stock declined from $34 in October to $19 in January of this year.

It took Microsoft's bid on February 1st to jolt Jerry to life. Suddenly talks were happening with Google, AOL, and News Corp. Had any of these discussions been happening sooner, Yahoo!'s stock would likely never have dropped to the levels which have now put in play.

It's no surprise Icahn showed up to this party. As Kara Swisher said, he smelled the blood in the water. The disappointment of shareholders was nearly universal following the breakdown in talks with Microsoft 2 weeks ago.