The Yahoo situation brings up some interesting issues. Does the right of a majority shareholders trump everyone else?
Or perhaps better phrased, does a shareholder who bought last week (Carl Icahn buys 50 million or 4% of Yahoo) have the same say as long time shareholders?
AND is it simply that every stock you hold and for that matter, every company out there simply exists – all bidding its time – until it’s sold to someone else at the highest conceivable price?
In other words, if it can be sold, it must?
Microsoft in its original offer said they would achieve $1 BILLION in savings … now, I have not gone over their messages with a fine tooth comb but it’s safe to say you pretty much ONLY achieve substantial savings in overhead by firing/laying off people. Yes, they said they would evaluate the situation and there are no “plans” for mass layoffs but not many companies come out and say we’re buying you to eliminate competition and fire most of the employees.
Again, if a company is perceived as currently undervalued, does it mean it should be dismantled and absorbed into another company?
And how quickly is that undervalued period allowed to “fester?” Apple was selling at $120 a share not more than 2 months ago and now is hovering around $190 … it has almost doubled in share – shouldn’t that mean in that two-month time period, Apple should’ve been on the market to be sold? Clearly it undervalued by nearly 50% in just 2 months?!
Or was it merely a mistake by a number of investors?
So, the system is not 100% perfect all the time is it?
So, if Yahoo is undervalued by most but not by what Microsoft at one point was willing to pay, does that mean Yahoo must sell?
That as a shareholder, you are only holding its shares until a better offer comes along? If it’s a dime more, a dollar more of five more a share – SELL! SELL! SELL?!
And yet, as a shareholder in bankruptcy hearings – you have the least amount of rights. First comes employees, bond holders, then those owed accounts payable and virtually in all circumstances, holders of common stock get squat … so why is the situation reversed here?
Is Yahoo officers, its board and its thousands of employees opinions worth nothing? That as long as someone is willing to offer $.01 more than what it’s selling for now, it’s SELL, SELL, SELL and raze the damn thing to the ground because that’s my right as a common stock holder?
What about companies such as Nextel (purchased by Sprint for $30+ billion but writing off $29.5 billion – essentially saying Nextel is about 10% for what we paid for it). How many employees of Nextel-Sprint will lose their jobs? Will the investment bankers who told Sprint that Nextel was worth $30+ billion say whoops and give back their fees? Of course, you could argue that Sprint mismanaged the buyout but I guess that’s nothing the investment bankers could’ve predicted or care about, right? Ot of course, Warner buying AOL and writing of $99 BILLION dollars of that purchase … yes, BILLION with a B … again, whoops?
Or this quote: “In 2002, when Alfred Rappaport, then professor emeritus at Northwestern University’s J.L. Kellogg Graduate School of Management, wrote in a column for The Wall Street Journal that buyers typically overpay for the companies they target, due partly to being overly optimistic about cost-cutting opportunities and their superior management capabilities.
Rappaport said that two-thirds of acquiring companies see their stock prices immediately fall upon news of a deal, a drop that “usually corresponds” to performance of such stocks over the next year. The “sobering facts” about mergers and acquisitions, he wrote, are that “a majority of them don’t work.”
Will Carl Icahn guarantee the stock price of MS will be fully worth the value of MS now and Yahoo at its highest? After all, he’s nominating his own board (did these 5-8 guys ride around on a bus until Carl Icahn told them to get off in Sunnyvale – yes sir, whatever you say, thank you for the check, sir. I will do as I’m told. You can count on me to vote as you say).
AFTER ALL he’s own his shares of Yahoo for … almost a week now. That’s what it’s all about? Buying at $25, bringing in 8 guys who have signed an oath to him and selling at $25.78?
Customers? Users? Employees? They are worth nothing. As long as you can buy at $25 and sell at $25.78, that’s ALL that counts?
Selling out everything to the highest bidder at the drop of a hat is the reason you build a company, right? – after all, who cares that MS will have to write off 50% of the purchase share or layoff 5,000 people and perhaps even close the Yahoo name – not their business. They bought shares and held for nearly a week – that gives him unlimited powers to do whatever they want.