Yahoo's Latest Icahn Blast - But They Will Sell

As the Yahoo! shareholders meeting on August 1st rapidly approaches, Yahoo! is preparing. They sent a letter to their shareholders on Thursday, urging them to vote against a proposal by Carl Icahn which could result in the unseating of some of all of the Board of Directors.

The letter, from CEO Jerry Yang and Chairman Roy Bostock was also filed with the SEC Thursday afternoon. The letter is pretty long, but pretty contentious as well. There's no doubt that the battle has just begun. Some high (or low) lights:

Carl Icahn bought his stock two months ago for an estimated average cost of less than $25 per share. He is well-known as a corporate agitator with a short-term approach to his investments . His short-term approach gives Mr. Icahn a strong incentive to strike any deal with Microsoft that enables him to recover his investment and get back his money quickly, even a deal that does not provide full and fair value to you. Is that in the interests of all stockholders? Clearly, it is not. Mr. Icahn has severely handicapped himself in his ability to negotiate a favorable transaction with Microsoft . Why?

• Mr. Icahn has made it clear that his only objective is to sell part or all of Yahoo! to Microsoft. That fact, combined with his lack of an operating plan going forward, means that he will have no leverage to negotiate a fair deal with Microsoft. He has set himself up for failure.

• Second, Mr. Icahn and his slate lack the working knowledge of Yahoo! and its Internet business needed to do two things that are required to successfully deliver a value-enhancing transaction for Yahoo! stockholders.

How can Yahoo! stockholders trust Mr. Icahn to deliver what he claims he can deliver when his actions have been so contradictory —and when all he has delivered so far is a risky proposal of questionable value from his new friends at Microsoft? Yes, the Microsoft/Icahn proposal is somewhat of an improvement over Microsoft’s last search-only proposal, but no one should confuse a modestly improved offer with a good offer. The Icahn/Microsoft proposal was more “smoke and mirrors” than objective reality.

The letter's waaaay too long to reprint the whole thing, but it's clear there's no love lost between these groups. But - they do say what they've said before - they'll sell the whole company for $33 / share.

... we will sell the entire Company to Microsoft for $33 per share or more if Microsoft will negotiate a transaction that delivers certainty of value and certainty of closing. This is the simplest, most straightforward way to maximize value for you.

Yahoo! closed Thursday at $22.44, by the way.

D-Day is two weeks away.