• Silicon Alley Insider, Friday, June 6, 2008 11:15 AM

Silicon Alley Insider's Yahoo shareholder Henry Blodget explains why he and his colleagues don't need seven weeks to decide whether to vote for Jerry Yang and the existing Yahoo board or Carl Icahn and his proxy slate. "We're voting for Jerry," he said, not because Jerry and co. played the Microsoft thing correctly (they didn't), but more because Carl Icahn's whole proxy fight is based on the presumption that once he has control of the Web giant, he can sell it to Microsoft for $33 per share.

That strategy, Blodget said, is a "Hail Mary" at best, because "if we were Microsoft and we saw Carl Icahn decapitate Yahoo's management in a proxy fight, we would immediately assume that we would soon be able to buy the whole kit and kaboodle for $25 per share. In other words, "Icahn has no idea what to do with Yahoo other than sell it to Microsoft."

Indeed, the only way Icahn can come out a winner is if Yahoo persuades Microsoft to buy the company at $30+ per share before the Aug. 1 shareholder meeting. But, given Blodget's observation, Microsoft will be in no hurry to do so. Yahoo's only leverage in the deal is to trot out a new search partnership with Google-a move that would effectively kill Microsoft's search ambitions-but even that might not work, due to regulatory concerns. So the ball is clearly in Microsoft's court, not Icahn's.

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