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Yahoo Shouldn't Have Let Icahn Come a-Board

Business is a sophisticated game of give and take. In the protracted case of Microsoft trying to bludgeon Yahoo into submission so it could take home only the heart of the company, there certainly was a lot of action and reaction.

Yahoo CEO and co-founder Jerry Yang obviously was in a pretty tough position, as was his board of directors, who stood embattled among all the shareholders looking to cash out and the others who prefer to believe in the Yahoo business model, which has served it well for most of its 15-year history.

True, Yahoo isn't the company it used to be. But neither is General Motors, Time Warner, Ampex or any number of other once-great U.S. companies that still serve a good purpose -- and that still have the potential to break out of their doldrums and be great once again.

You can argue that Ampex -- which invented analog tape -- should have been Sony, but it still has its loyal niche customers and employs several hundred people here in the Bay area. GM and Ford should be Honda and Toyota, but they still have their loyal customers. You could argue that Yahoo should be Google because it owned search first -- years before Google started getting traction in 1999.

But it's not. Yahoo is simply Yahoo, the world's most popular home page, sporting a good but not great search engine, excellent news coverage, dependable and user-friendly calendar and e-mail tools, and lots of other features. All free for users. A great advertising vehicle -- so much so that Microsoft was willing to part with $40 billion at one point in the awfully long mess of an attempted takeover.

Microsoft CEO Steve Ballmer told analysts today that, yes indeed, the deal is officially off the company's books and that no more ill-advised overtures toward Yahoo will take place. As we've mentioned several times before here at The Station, he could have saved an awful lot of time, lawyer money and aggravation if he would have simply asked some key people -- namely, the open-source community -- if this was a deal that could work.

Of course it was never going to work. We said that way back on May 5, and we've had to echo that thought several times since then because lots of people didn't believe it.

One lasting vestige of the attempted coup was that Yang had to give a bit and allow billionaire investor and corporate raider Carl Icahn and a couple of his buddies seats on the Yahoo board. By virtue of owning almost 5 percent ($1 billion invested) of the company, we suppose Icahn has a strong case here.

But he's got to know that he'll always be outflanked by Yang and a total of eight Yahoo originals who hang together.

As Yang looks to rebuild his company after all these negative shenanigans, he'll now have to deal with Icahn on a regular basis. He may live to regret that move.

Chris Preimesberger

Chris J. Preimesberger

Chris J. Preimesberger is Editor-in-Chief of eWEEK and responsible for all the publication's coverage. In his 13 years and more than 4,000 articles at eWEEK, he has distinguished himself in reporting...