Big fight, little fallout after Icahn battles

Billionaire Carl Icahn may use the three board seats at Yahoo Inc. that he added to his collection on Monday to do ... not much.

The colorful corporate raider, who has been locked in a public feud with Yahoo over its rejection of Microsoft Corp.'s takeover attempt, spent more than $1.5 billion to amass a 5 percent stake in Yahoo and snag the board seats. But without the support of all-important institutional investors, his impact after winning similar fights has been muted.

"Icahn's strategy is get in, make money and get out," said Thomas Lys, a professor at Northwestern University's Kellogg School of Management who teaches about mergers and acquisitions.

The 72-year-old Wall Street veteran, whose movement to amass shares has been known to make some executives sweat, sits on at least seven boards and has hand-picked surrogates serving on many others, according to regulatory filings.

Many of those seats - like the two he picked up this spring for his nominees on Motorola Inc.'s board - were acquired after Icahn locked horns with executives during expensive and public proxy battles.

But so far, his impact on Motorola has been minimal.

The Schaumburg, Ill.-based cell phone maker agreed to get Icahn's input on the planned separation of its mobile devices operations into a freestanding company and the ongoing search for the division's chief executive.

In exchange, Icahn agreed not to solicit proxies at the company's annual meeting and to dismiss litigation he filed against the company.

Critics say Icahn can be little more than a distraction, especially for troubled companies like Motorola that are already in the midst of a massive turnaround.

"Motorola is changing itself at a DNA level and when it finishes over the next year or so, it's going to be a very different company," said Jeff Kagan, an Atlanta-based independent telecommunications industry analyst. "And instead of just focusing on developing the best company strategy and preparing a win for the future, they now have to focus on all these short-term issues with the investors. I don't know if it works."

During more than four decades spent buying and selling companies, Icahn made a name for himself by leading hostile takeover battles for names such as TWA and RJR Nabisco.

Icahn also won three board seats on Blockbuster Inc. in May 2005 and, since then, the movie rental chain's stock price has plunged by about 75 percent.

And last year, Icahn won three seats on the board of luxury homebuilder WCI Communities Inc. and was elected chairman. The Bonita Springs, Fla.-based company, staggering under the weight of the collapsing housing industry, had been examining "alternative restructuring proposals," but announced earlier this month that it was dissolving a committee looking into the matter.

Despite his newly acquired seats at Yahoo, Icahn's power faces a limited future there.

That's because eight of Yahoo's nine current directors will remain on the board. That means Icahn will need support from powerful institutional investors to persuade the company to accept a deal with Microsoft.

"If they join in, then the game's over," Lys said. "If they don't, then with three seats, Icahn can't do very much. He can be a pain, but you can ignore pain."