Icahn Rumor Lifts Yahoo Stock

Billionaire Investor Reportedly to Seek Control of Board

Shares of Yahoo, the Internet company that rejected a $47.5 billion buyout offer from Microsoft, rose yesterday because of reports that billionaire investor Carl Icahn may seek control of its board.

Icahn is considering a proxy fight and last week built a "significant" position in Yahoo of as much as 50 million shares, CNBC anchor David Faber said, citing people who have spoken with the investor. Icahn may make a decision today, the Wall Street Journal said, citing a person familiar with the matter.

The move may increase pressure on Yahoo chief executive Jerry Yang, who spurned the offer from Microsoft as too low. Icahn has influenced other companies by threatening to challenge directors for their seats. Motorola said it would split off its phone business after Icahn began pushing for changes last year.

"It would be in the interests of all shareholders if an aggressive, proactive shareholder-rights activist would get Yahoo sold to Microsoft," said Laura Martin, an analyst at Soleil Securities in New York. She said Icahn has the organizational skills and the capital needed. "He would be doing a good deed for shareholders and Yahoo employees," she said. She recommends selling the stock.

Yahoo, based in Sunnyvale, Calif., rose $1.30, to $26.56, or 5.2 percent, on the Nasdaq Stock Market. The shares have declined 7.4 percent since May 2, the day before Microsoft dropped its bid.

Icahn was not sure whether he would nominate a full or partial slate of directors, the Journal reported. He didn't respond to phone messages from Bloomberg News.

Yahoo spokeswoman Tracy Schmaler declined to comment. Frank Shaw, a spokesman for Microsoft, based in Redmond, Wash., said he had no knowledge of Icahn's interest in mounting a proxy fight and reiterated that Microsoft had backed away from Yahoo since dropping its bid.

Yahoo's deadline for board nominees is tomorrow. The annual meeting is set for July 3.