• Silicon Alley Insider, Tuesday, July 15, 2008 11:16 AM

Carl Icahn ruined what would have otherwise been a relatively nice search deal for Yahoo, says Silicon Alley Insider's Henry Blodget. While sources from Microsoft and Yahoo disagree as to the extent of Icahn's involvement in the deal, Blodget assumes for the sake of argument that Icahn was to be put in charge of what remained of Yahoo following the sale of its search business to Microsoft. "Absent such a condition, Microsoft's new search proposal is actually reasonable (or at least worth serious consideration)," he says.

A Yahoo course claims that Friday's proposal was a joint deal between Microsoft CEO Steve Ballmer and Icahn, with a provision to immediately replace the Yahoo board with Icahn's nominees as well as removing top management at the Internet giant. Microsoft sources claim there was never a joint proposal, and that the proposal that came forth Friday did not require a change in control at Yahoo. Icahn, meanwhile, says there was a joint proposal and board change, but this did not necessarily include the removal of CEO Jerry Yang and other top Yahoo management.

Ugh, somebody's lying here. Blodget thinks that Icahn's personal agenda messed the whole thing up and that "Microsoft has since recognized this and is running as far from Carl as it can." The software giant doesn't actually care about anything but Yahoo's search business, he says, adding that all other parts to the proposed deal -- the dividends, the sale of Asian assets, loans, etc. -- were devised to placate Icahn and angry Yahoo shareholders about the earlier blown deal.

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