Icahn's nominees to sit on Yahoo board

Seattle: Yahoo will add the former chief executives of Viacom and Nextel Partners to its board of directors as part of the company's deal to ward off a proxy fight with billionaire investor Carl Icahn.

The company selected Frank Biondi Jr and John Chapple, former chief executives of Viacom and Nextel Partners, respectively, from a list of nine recommendations from Icahn.

Icahn, who has a long history of corporate rabble-rousing, had been pressing Microsoft and Yahoo to renew buyout talks.

The New York-based financier acquired five per cent of Yahoo's shares and spent two months spearheading a campaign to replace the internet company's entire board after it rejected Microsoft's $47.5 billion takeover bid in May.

A showdown with Icahn had been set to culminate in a shareholder vote at Yahoo's August 1 annual meeting, but a truce in late July headed it off.

As part of the deal, Icahn got a seat on the board, and Yahoo agreed to name two others backed by the activist investor. To make way for the new directors, Robert Kotick, chief executive of video game maker Activision Blizzard, stepped down after five years on Yahoo's board.

Experience issues

None of the three new directors has led a web company, but together Biondi and Chapple have high-profile content and technology credentials.

Biondi, 63, served as CEO of Viacom, the entertainment company that owns MTV and Paramount Pictures, among many other content brands, from 1987 to 1996. He led Universal Studios until 1998 and is currently senior managing director of WaterView Advisors, a private equity fund specialising in media and entertainment ventures.

Biondi has worked with Icahn in previous battles - known as proxy contests - to unseat corporate boards. During Icahn's unsuccessful challenge to Time Warner Inc.'s management in 2005 and 2006, the activist investor tapped Biondi as his intended replacement CEO.

Chapple, 55, was chief executive of Nextel Partners from 1998 to 2006, when the wireless company was acquired by Sprint Communications. He is currently president of Hawkeye Investments, a private equity firm that focuses on telecom ventures.

Whether Biondi and Chapple could help turn Yahoo around is unclear.

"The fate of Yahoo is not going to change by any addition of these board members," said Global Equities Research analyst Trip Chowdry in an interview. "This is a blessing for the competition." With Icahn, Biondi and Chapple on board, Chowdry said, Yahoo will suffer from having "too many cooks in the kitchen."

Chowdry said he expects their appointments to result in strategic plotting and restructuring that would simply give Microsoft and Google more space to grow stronger.

Biondi may have been tapped in part because of his experience bringing in ad dollars.

Advertising

"He is very well aware of the advertising community, of Madison Avenue and the value of content," said Harold Vogel, veteran media and entertainment analyst and head of Vogel Capital Management.

Vogel said Biondi might also push Yahoo to look overseas to boost ad revenue, but noted that nothing Biondi may do is a quick fix for Yahoo's woes.

Despite a major overhaul in its search and ad technologies in February 2007, the slumping Silicon Valley icon still lags far behind online search leader Google in its ability to cash in on the burgeoning online advertising market.

Co-founder Jerry Yang replaced CEO Terry Semel last summer, but his efforts to turn Yahoo around have not paid off.

Just days before Microsoft announced its desire to buy Yahoo known in February, the Internet company's shares slipped below $20 per share for the first time since 2003 on news of sinking profits and significant layoffs.

Yahoo's stock got a lift when it looked like Microsoft's offer, which valued Yahoo at $33 per share, could result in a deal. But as a buyout grew increasingly unlikely, shares returned to the $20 level.

Washington (Reuters) Billionaire investor Carl Icahn reported on Thursday that he owned 55 million shares in Yahoo as of June 30 and that he had increased his stake in Motorola to 144.1 million shares from 115.6 million shares the prior quarter.

Icahn's Icahn Capital also disclosed he cut his stake in the Class A common stock of Time Warner Cable to 1.8 million shares from 4.7 million shares as of March 31.

He said in his quarterly disclosure filing with the US Securities and Exchange Commission that his portfolio increased in value to $4.85 billion from $4.64 billion.

Icahn also reported that he had dissolved his small stake in Perry Ellis International Inc since the prior quarter and had taken up an 86,430-share stake in biopharmaceutical company Emisphere Technologies.

Also, his stake in Amylin Pharmaceuticals increased to 6.8 million shares from 6.3 million shares.

Icahn settled his proxy battle with Yahoo just days before its August 1 shareholder meeting, at which the activist investor had originally sought to replace the entire board with his nominees and oust chief executive Jerry Yang.

As part of the deal, Yahoo agreed to appoint Icahn to its nine-member board and add two new directors from Icahn's list of nominees.

Icahn has repeatedly placed pressure on mobile phone maker Motorola to turn around the business.