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Icahn vows to oust ***** directors in shareholder revolt
Thursday May 15, 11:52 am

Icahn sets out to replace 'irresponsible' ***** board in move to renew Microsoft talks

SAN FRANCISCO -- Billionaire investor Carl Icahn is setting out to oust ***** Inc.'s board of directors for "irresponsible" and "unconscionable" actions that led Microsoft Corp. to withdraw a $47.5 billion offer to buy the slumping Internet pioneer.
In a letter sent Thursday to ***** Chairman Roy Bostock, Icahn wrote that outraged ***** shareholders had urged him to lead a campaign to replace *****'s 10 directors at the company's July 3 annual meeting in hopes of bringing Microsoft back to the bargaining table.

"I believe that a combination between Microsoft and ***** is by far the most sensible path for both companies," Icahn wrote.

To give him leverage in the looming battle, Icahn revealed that he has spent at least $1.3 billion snapping up about 59 million ***** shares to give him a roughly 4 percent stake in the Sunnyvale-based company. He plans to seek approval from the Federal Trade Commission to acquire up to $2.5 billion in ***** stock.

A ***** representative said the company would respond to Icahn's attack "soon."

Icahn told *****'s board it could quickly quell the shareholder mutiny by renewing negotiations with Microsoft.

Besides himself, Icahn's alternate board of directors includes Internet entrepreneur Mark Cuban, who got rich by selling Broadcast.com to ***** for $8.1 billion in stock in 1999. Cuban used part of his ***** windfall to buy the Dallas Mavericks, a National Basketball Association franchise that he still owns.

Icahn's other notable nominees include: venture capitalist Adam Dell, whose brother, Michael, founded Dell Inc.; and Frank Biondi Jr., the former chief executive of Viacom Inc.

The revolt threatens to jettison Jerry Yang from the company that he started with David Filo 14 years ago. Yang is one of *****'s directors and has been trying to engineer a turnaround since taking the job of CEO 11 months ago.

Together, Yang and Filo -- both billionaires -- still own 134 million ***** shares, or nearly 10 percent of the company.

Yang and the rest of *****'s board are on the hot seat for rejecting Microsoft's initial bid of $44.6 billion, or $31 per share, and taking measures that finally drove away the software maker.

Microsoft CEO Steve Ballmer orally offered to raise the offer to $47.5 billion, or $33 per share, earlier this month. He withdrew the bid May 3 after Yang and Filo, acting on behalf of the ***** board, held out for $37 per share -- a price that *****'s stock hasn't reached in more than two years.

Yang has argued ***** eventually will be worth more than $50 billion if it can expand its share of a rapidly growing Internet advertising market that so far has been dominated by rival Google Inc. In a forecast released while ***** tried to thwart the Microsoft bid, management predicted net revenue growth of at least 25 percent in 20009 and 2010 -- well above its recent pace of 12 percent.

"It is irresponsible to hide behind management's more than overly optimistic financial forecasts," Icahn wrote. "It is unconscionable that you have not allowed your shareholders to choose to accept an offer that represented a 72 percent premium over *****'s closing price of $19.18 on the day before the initial Microsoft offer."

***** shares rose 24 cents to $27.39 in midday trading Thursday.

While Icahn made it clear his challenge is aimed at selling ***** to Microsoft, there are no guarantees the software maker is still interested in buying its rival.

A Microsoft spokesman declined to comment on Icahn's letter, saying the Redmond, Wash.-based company has "moved on."

That sentiment echoes what Ballmer and Microsoft executives have been saying publicly as they pledged to find other ways to bolster the company's unprofitable Internet operations and mount a more serious challenge to Google.

But many analysts believe Microsoft is just posturing as part of a plan to depress *****'s stock so it will be easier to negotiate a friendly deal within a few months. Others believe the window of opportunity is closing for a Microsoft-***** deal, given that it might be more difficult to win U.S. antitrust approval for the combination after a new president ushers in a new administration in January.

Collins Stewart analyst Sandeep Aggarwal is in the camp that believes Microsoft will eventually buy ***** for $33 or $34 per share. The "body language from ***** and Microsoft do not suggest that both companies have really moved on," Aggarwal wrote in a Thursday research note.

If the two companies really abandoned hope for a deal, Aggarwal reasons they would have already announced other moves indicating they were going in a new direction.

For instance, ***** has been discussing a possible advertising partnership with Google for weeks without agreeing to a deal. And if Microsoft weren't still interested in *****, Aggarwal believes the company would have already announced another acquisition or "radical changes" in its strategy for building a more compelling Internet search engine.

In his letter, Icahn urged *****'s board not to enter into any transactions, such as a Google ad partnership, that might ruin the chances of a sale to Microsoft. Ballmer cited *****'s flirtation with Google as one of the reasons for Microsoft's bid.

Icahn has a long history of challenging corporate boards and his efforts often result in shake-ups. Most recently, he has forced major changes at Blockbuster Inc. and Motorola Inc. He also played a pivotal role in the recent $8.5 billion sale of business software maker BEA Systems Inc. to rival Oracle Corp., which dropped an earlier bid of $6.7 billion.

Quote of the Day ? "Every raise has a fall. this applies to stock market also"

***** Responds To Icahn: You're Wrong; We're 'Crystal Clear'
Thursday May 15, 6:41 pm


The ***** ( YHOO - News) board's response to Carl Icahn just came over the transom in the form of a letter from Roy Bostock, chairman of the board. The gist: Icahn's take is wrong on the events leading to Microsoft's (NasdaqGS: MSFT - News) withdrawal of its bid so he should not be allowed to take over the board.
Bostock: "Unfortunately, your letter reflects a significant misunderstanding of the facts about the Microsoft proposal and the diligence with which our board evaluated and responded to that proposal. A fair-minded review of the factual record leads to one conclusion: that *****!'s ten-member board, comprised of nine independent directors along with *****! CEO Jerry Yang, remains the best and most qualified group to maximize value for all *****! stockholders. Conversely, we do not believe it is in the best interests of *****! stockholders to allow you and your hand-picked nominees to take control of *****! for the express purpose of trying to force a sale of *****! to a formerly interested buyer who has publicly stated that they have moved on.

Bostock reminds Icahn there is no offer on the table but insists "we have been crystal clear in our stance that we have been and remain willing to consider any proposal from any party including Microsoft if it offers our stockholders full and certain value." The full text, which can be found after the jump, details the ***** version of the bid saga and concludes with a line that runs a tad counter to the rest: "We look forward to a productive dialogue." (Icahn's letter is here.)

Full text:

May 15, 2008
Dear Mr. Icahn:

We are in receipt of your letter with regard to your intention to seek control of *****!'s board of directors.

Unfortunately, your letter reflects a significant misunderstanding of the facts about the Microsoft proposal and the diligence with which our board evaluated and responded to that proposal. A fair-minded review of the factual record leads to one conclusion: that *****!'s ten-member board, comprised of nine independent directors along with *****! CEO Jerry Yang, remains the best and most qualified group to maximize value for all *****! stockholders.

Conversely, we do not believe it is in the best interests of *****! stockholders to allow you and your hand-picked nominees to take control of *****! for the express purpose of trying to force a sale of *****! to a formerly interested buyer who has publicly stated that they have moved on. Please may I remind you that there is currently no acquisition offer on the table from that company or any other party. That said, we have been crystal clear in our stance that we have been and remain willing to consider any proposal from any party including Microsoft if it offers our stockholders full and certain value.

From the beginning of the process with Microsoft, *****!'s independent directors focused on one central goal: how best to maximize stockholder value. At all times directing this process, *****!'s independent directors carefully considered Microsoft's initial unsolicited proposal, which was at the time valued at $31 per share. After considering input from its financial advisers the board unanimously concluded that Microsoft's proposal significantly undervalued *****! and was, therefore, not in the best interests of the company or our stockholders. While we rejected this offer publicly on February 11, 2008, we could not have been more clear in that communication and in every subsequent communication, both public and private, that we were and are willing to enter into any transaction that would maximize value for stockholders and provide them certainty of value.

The record of our efforts to engage Microsoft in meaningful discussions is unequivocal. Following receipt of Microsoft's proposal on January 31, our board of directors has met over twenty times to review Microsoft's proposal and *****!'s other strategic alternatives. Throughout this process our board kept an open mind and an open ear. Our independent directors met with several of our largest stockholders to solicit their views and to make it clear that *****!'s independent board is fully committed to maximizing stockholder value. In addition, at the direction of our board, our management team met with many of our investors to provide insight into *****!'s strategy and views on value.

Our board's openness also extended to Microsoft. Without reciting all of the contacts between us and between our advisers, the senior-most management of *****! and Microsoft and the companies' respective financial advisers spoke on numerous occasions and met in person seven times. During those meetings, *****! discussed its strategic objectives in search and display advertising monetization, its perspectives on operating strategy and integration in a transaction with Microsoft, its perspectives on transaction synergies, and other non-price deal terms. Because certainty of closing is a critical issue, we sought to understand Microsoft's thinking with regard to the regulatory issues associated with a potential transaction. In fact, at the board's direction, our lawyers on March 28 asked for additional information in this regard, information which was never forthcoming.

On April 15th, a meeting was held at *****!'s request. At that meeting, which included our respective financial advisors, we made clear, once again, that we were open to a transaction with Microsoft. During those discussions, *****! made a detailed presentation of its strategic and financial plan, its thoughts on integration and its view with respect to the potential synergies that could be achieved in a transaction, essentially laying the foundation for Microsoft to understand--and respond to--our board's conclusion that Microsoft's offer substantially undervalued the company. Following that meeting we also provided to Microsoft a list of key non-price deal terms that our board believed were critical items to be addressed in a deal to provide reasonable protections for our stockholders.

Throughout this period, Microsoft continued to state that it would not raise its offer, and even suggested that it could lower it.

Despite this failure by Microsoft to respond in any substantive way to any of *****!'s requests, on May 2nd, the same day we first learned of Microsoft's apparent willingness to increase its proposal to $33 (although this oral "offer" was never delivered in writing and did not include details of a cash/stock mix), our board determined to continue discussions, instructing Jerry Yang to indicate to Microsoft that we would be prepared to enter into a transaction that valued *****! at $37 per share and that provided reasonable certainty of value and certainty of closing. This was communicated to Microsoft in-person at a meeting in Seattle on May 3rd. With Microsoft's offer at $33 and *****!'s counter-proposal at $37, Microsoft elected, within hours, to walk away from the negotiating table and informed us that they were "moving on," having never engaged further on price or any of the key non-price deal terms.

In short, *****!'s board was at every point in this process prepared to enter into a transaction with Microsoft that would maximize stockholder value--and included certainty of value and closing. What *****!'s independent board refused to do was to allow control of this company to be acquired for less than its full value.

That brings us to today. Our business is performing well as evidenced by our first quarter results. As we have publicly stated, our board continues to actively and expeditiously explore strategic alternatives to maximize stockholder value. None of the alternatives we are considering would preclude us from entering into a transaction with Microsoft or any other party.

We continue to believe that *****!'s current board has the independence, the knowledge, and the commitment to navigate the Company through the rapidly changing Internet environment and to deliver value for *****! and its stockholders.

We look forward to a productive dialogue.

Very truly yours,

Roy Bostock

Chairman of the Board

Inflation at 44-month high of 7.83pc
16 May 2008 12:52 pm



Mumbai - Notwithstanding the efforts made by the government to check price-rise, inflation rose to a 44-month high of 7.83 per cent for the week ended May 3, against 7.61 per cent in the previous week, mainly due to the rising prices of essential food items and manufactured products.

Inflation was last above this level at 7.87 per cent on September 11, 2004 as per provisional figures and 7.86 per cent for the week ended September 18, 2004, according to final figures. The WPI based index inflation stood at 5.74 per cent in the corresponding week a year ago.

Voltas FY`08 net at Rs 208 cr

Mumbai, May 16: Tata Group firm Voltas on Thursday announced a consolidated Net Profit of Rs 208.37 crore for the year ended March 31, a 3.37 per cent growth over the year-ago period.

The total income rose to Rs 3,247.23 crore for FY'08, from Rs 2,588.69 crore in the previous fiscal.

The board has declared a dividend of 135 per cent for 2007-08 fiscal on shares of face value of Rs one each.

For the year ended March 31, the company had a standalone Net Profit of Rs 208.37 crore, a growth of 12 per cent over the year-ago period.

The standalone total income rose to Rs 3,087.55 crore in FY'08, from Rs 2,458.6 crore in the previous fiscal.

Tata Group executive vice-president M M Miyajiwala said the company's order book stands at Rs 4,631 crore, up 112 per cent over the last year.

He said the company has plans for acquisitions. "All the cash we are conserving is meant for acquisition," he said.

The company had Rs 300 crore cash on hand as of the year-end. He, however, did not elaborate on the subject.

Voltas is cautious about accepting new orders in the wake of fluctuations in dollar-rupee prices and manpower requirement, said Miyajiwala.

The company's electro-mechanical projects and services segment grew by 21 per cent during the year, engineering products segment registered 33 per cent growth while unitary cooling products grew 37 per cent.

The company's international business is currently concentrated in the Middle East and the company wants to reach to countries like South Africa, Vietnam and Singapore to diversify risks, he said.

Tech Mahindra gets USD 700mn contract

Mumbai, May 16: Telecommunications firm Tech Mahindra Ltd has bagged a USD 700 million contract from BT Group to improve the latter`s IT infrastructure, the Economic Times newspaper reported on Friday.

"At any given time we are chasing big deals and long-term contracts, but this is purely speculative," the report quoted C.P. Gurnani, president for international operations, Tech Mahindra, as saying.

BT is Tech Mahindra`s largest client, accounting for nearly 60 percent of its business, the newspaper said.

When contacted, a company spokesperson declined to comment on the report.

Reliance Infra dilutes 5% stake in pre-IPO placement

New Delhi, May 16: Anil Ambani Group company Reliance Infratel is diluting 5 per cent stake to a clutch of American and European investors in a pre-IPO placement, a deal that values the company at about Rs 50,000 crore.

When contacted, Reliance Infratel officials declined to comment.

Sources, however, said that the company has entered into a deal with some American and European investors for the pre-IPO placement.

The latest deal values the company at around Rs 50,000 crore while the earlier 5 per cent stake dilution that Reliance Infratel had made, valued the company at about Rs 28,000 crore.

The company had earlier privately placed 5 per cent stake to a group of institutional investors. Reliance Telecom Infrastructure sold the stake for Rs 1,400 crore to a host of investors including George Soros, HSBC, Fortress Capital, New Silk, Galleon, DA Capital and GLG Capital.

Earlier this week, market regulator Securities and Exchange Board of India cleared the Initial Public Offering of Anil Ambani Group firm Reliance Infratel.

Reliance Infratel, the telecom infrastructure division of Reliance Communications, would offer 10 per cent equity to the public valued at Rs 5,000-6,000 crore.

The issue proceeds are proposed to be utilised towards funding development of passive infrastructure and general corporate purposes, the company had earlier said. Reliance Infratel owns mobile towers and other infrastructure.

*****, Google talks have not cooled

Chicago, May 16: Talks about a search advertising partnership between ***** Inc and Google Inc are continuing but an announcement was not imminent, a source familiar with the talks said on Thursday.

The two Internet companies have been discussing a partnership in which ***** would carry advertising from Google alongside its own search results.

India`s growth robust, irreversible: WB

Mumbai, May 15: India`s growth, despite current crisis of spiraling inflation, was robust and irreversible, a top World Bank official said here on Thursday.

"However, to sustain and improve it further, the country will have to increase agricultural productivity by moving towards two crops per year, improved irrigation processes and recharge of groundwater," he said.

"The growth path (of India) was robust and irreversible ... In the crisis situation growth can reduce but has the capacity to spring back," World Bank South Asia Region Vice-President Praful Patel said.

India can undertake several interventions like managing flood, prevent drought, improve storage of water and expanding irrigation by bringing in technologies.

Since the average farmland is reduced and cannot be expanded, it is appropriate to use efficient technology, high-yielding seeds, right kind of fertilizers and promoting public-private partnership.

Patel said that India has to work in coordination and cohesiveness within the country as well as the region.

Stating that the early arrival of monsoons was good sign for crops, Patel said India was expected to produce 10 million tonnes of wheat which would make it self-sufficient and may provide surplus for exports.

In Mumbai to host a competition of NGOs with innovative ideas to combat stigma and discrimination of people affected with HIV/AIDS, Patel said the World Bank would provide Rs 16 lakh each to the 25 winners out of the selected 75 participants from seven countries.

U.S. futures signal upbeat start; ***** rallies
Fri May 16, 2008 6:47am

LONDON, May 16 - U.S. stock index futures edged up on Friday, suggesting a positive start to trade on Wall Street ahead of data on housing and consumer sentiment.

***** (YHOO.O: Quote, Profile, Research) said late on Thursday it had struck an advertising partnership deal with Britain's WPP Group (WPP.L: Quote, Profile, Research) that will let WPP buy ads on *****'s online ad exchange. ***** said the deal would first involve WPP units GroupM and 24/7 Real Media and its shares were trading up 1.3 percent from their last close in Frankfurt at 17.90 euros (YHOO.F: Quote, Profile, Research). The stock was the most actively traded stock among major U.S. companies quoted in Germany.

With a light corporate calendar, data on housing starts and early May consumer sentiment will likely provide the focus at least for early trading.

By 1010 GMT June Dow Jones futures DJM8 were up 0.19 percent, while Standard & Poor's 500 futures SPM8 were up 0.21 percent and Nasdaq 100 futures NDM8 were up 0.2 percent.

The Reuters/University of Michigan index of consumer sentiment is due at 1355 GMT.

The index is expected to have fallen to 62.0 in early May from 62.6 in late April, making this the worst reading since March 1982, when the economy was plagued by slow growth and high inflation.

But with stocks having performed fairly strongly this week, a negative reading could have limited impact on the market.

"The market seems to be shrugging off all this negatgive news. If it came in as expected, even though it's bad, I think there will be a limted negative reaction by the market," said IG Index chief markets analyst David Jones.

"Housing starts could be be interesting, that one has got potential for un upset again, if it comes in worse than expected, but at the moment we're expecting another strong start (on Wall Street)," he said.

On Thursday, the Dow Jones industrial average .DJI shot up 94.28 points, or 0.73 percent, to end at 12,992.66. The Standard & Poor's 500 Index .SPX rose 14.91 points, or 1.06 percent, to 1,423.57. The Nasdaq Composite Index .IXIC climbed 37.03 points, or 1.48 percent, to close at 2,533.73.

The S&P is on track for a 2.5 percent gain this week, its best week in a month, while the Nasdaq is on course for a 3.6 percent rise, also its best in a month.


TECH STOCKS SHINE

Tech stocks featured among the most actively traded in Europe on Friday. Intel (INTC.O: Quote, Profile, Research) rose 1.9 percent from its last close in Frankfurt to 16.10 euros (INTC.F: Quote, Profile, Research), while Dell Inc (DELL.O: Quote, Profile, Research) rose 1.2 percent to 13.40 euros (DELL.F: Quote, Profile, Research) and Cisco Systems (CSCO.O: Quote, Profile, Research) shares rose 0.8 percent from their previous close in Germany to 17.09 euros (CSCO.F: Quote, Profile, Research).

Among financials, JPMorgan Chase & Co (JPM.N: Quote, Profile, Research) expects to liquidate or spin off much of the asset management arm of Bear Stearns Cos Inc (BSC.N: Quote, Profile, Research) after it takes over Bear next month, people familiar with the situation said Thursday.

Bear Stearns Asset Management (BSAM), which during the past year generated more bad news than revenues, has about 400 employees and managed $39 billion in investments at the end of February.

On Monday, JPMorgan Chief Executive Jamie Dimon told a UBS investor conference he expected the bank would close down "big parts of Bear's asset management business".

JPMorgan shares were quoted up 1.8 percent from their previous close in Frankfurt, although on no volume. Fannie Mae (FNM.N: Quote, Profile, Research) is expected to announce on Friday that it is getting rid of a policy that requires higher downpayments on home mortgages in areas where home prices are dipping, the Wall Street Journal reported.

Fannie Mae was not immediately available for comment. Fannie Mae shares were indicated up 1.2 percent in Frankfurt, although no volume had changed hands.

In a light corporate calendar, Abercrombie & Fitch (ANF.N: Quote, Profile, Research) reports first-quarter earnings. (Editing by Louise Ireland)


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