Microsoft cops to talking with Icahn on Yahoo


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Dispensing with its previous above-the-fray posture, Microsoft has admitted talking to activist Yahoo shareholder Carl Icahn, who is trying to oust the Internet company’s board and Chief Executive Jerry Yang for failing to sell out to the software giant.

In a Q-and-A session with the Washington Post published today, Microsoft CEO Steve Ballmer said of Icahn: ‘Obviously, he has talked to some of our folks’ since amassing his stake in the Internet company. We asked for more details but a Microsoft spokesman declined to elaborate.


Despite Ballmer’s ‘obviously’ characterization, it wasn’t obvious at all that the two were chatting -- Microsoft had previously denied any contact. The first hint of contradiction might have come Wednesday, when Icahn gave what we professional reporter types call a non-denial denial on CNBC.

Asked how closely he had been in communication with Microsoft management, Icahn came out with: ‘I wouldn’t say closely, and I wouldn’t want to talk about it anyway, you know?’

There is good reason to think such discussions could be critical. If Microsoft tells Icahn that it is really and truly done with trying to buy Yahoo, Icahn might be best served by dumping his shares and walking away.

The fact that he has been chatting to the Redmond behemoth and is still in the game, therefore, suggests there is a good chance that a merger could still be had.

Which makes Icahn’s next sentence on CNBC’s ‘Fast Money’ more interesting: ‘I would just tell you that I do believe that Microsoft really eventually would want and would need this company.’

A day later, it appears that Icahn might have some basis beyond instinct, logic and speculation for what he’s saying. Which is more than we can say for a lot of the journalism on the topic.


-- Joseph Menn