Why Internet companies are attractive takeover targets: They can't manage

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Don't mix management & piracy

I'm not prepared to comment on Yahoo's management capabilities. After all, I don't think very highly of most managers today - old style, new style or hyper-modern (which is a 'hole 'nother story).

I do take exception at the confusion of two different issues and logic failure that implies.

The first is of course the management capability of Internet companies.

The second is the action of corporate raiders such as Carl Icahn.

The problem is that by presuming the first is proven given the second is the presumption that Mr. Icahn and his ilk are focused on the quality of the management team. They are not! They are focused on the fact that they can make money by splitting up (or selling the company). That's it! Nothing else.

They require two and only two criteria. First, that someone is willing to pay more for the whole company or the parts of the company than they will pay on the open market. Secondly, can they, either by buying enough shares, or by pure political means, force the sale or is a sale a high probability. If the answer is yes to both, they're interested. If not they're not.

Carl Icahn obviously believed the first about Yahoo or he wouldn't have bought in at all. And most of the larger internet companies are good targets (witness AOL). When Jerry Yang refused Microsoft's offer, Mr. Icahn went to the media to try to convince the other shareholders to support him. This is pure play ... get everyone else to pay for your success.

That's the full extent of the story. Jerry Yang's ability to manage the company has no influence on the situation at all. Welcome to how raiding works.

Remember Wendy's & Tim Horton's?

Posted by: PMP'sicle   Posted on: 06/11/08 You are currently: a Guest | Members login | Terms of Use

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