Legg manager unsure if to support Icahn versus Yahoo
CHICAGO (Reuters) - A portfolio manager for Yahoo Inc's (YHOO.O) third-largest institutional shareholder, Legg Mason Capital Management, said on Friday he is not sure if he will support activist investor Carl Icahn's board slate.
Icahn is seeking to oust Yahoo's board in a bid to revive buyout talks with Microsoft Corp (MSFT.O). If his nominees are elected at an August 1 meeting, Icahn says they will hire a new chief executive to replace Jerry Yang, who co-founded Yahoo.
Legg Mason fund manager Robert Hagstrom called it a choice between "the devil you know and the devil you don't know."
"Icahn has got three things. He wants to fire Jerry, eliminate the severance package and he wants to force the sale," he told reporters on the sidelines of Morningstar's annual investment conference in Chicago.
"If he can't force Microsoft to buy them, what's plan B? I need a plan B. And if you are going to fire Jerry, who do you hire?" said Hagstrom, whose Legg Mason Growth Trust counts Yahoo as its top holding.
His comments come after Legg Mason Inc's LM.M star portfolio manager, Bill Miller, said in late May that he has not decided whether to support Icahn's proxy battle.
Since then, Yahoo has rejected another Microsoft offer to buy its search business and to take a minority stake in the Web company. Instead. Yahoo chose to sign a search advertising deal with Internet leader Google Inc (GOOG.O) in mid-June.
Shares of Yahoo have fallen 20 percent in the weeks that followed, as Microsoft signaled that it was not interested in renewing its bid for the Silicon Valley company. Whatever the merits of the Google deal, analysts said it would not boost Yahoo's share price to the $33 that Microsoft had offered.
Yahoo shares were down 2.1 percent to $20.92 in Friday afternoon trading on Nasdaq.
But while many shareholders are unhappy with Yahoo's management, it was not clear how much of that anger would translate into support for Icahn as it was not certain if he could bring Microsoft back to the table.
Brian Rogers, chairman and chief investment officer at T. Rowe Price Group, also said he did not know how the firm would vote on August 1. The firm owned 1.11 percent of Yahoo shares as of March 31, compared to Legg Mason's 5.24 percent.
Like Hagstrom, Rogers said a Microsoft and Yahoo combination made sense. Both men blamed personalities for getting in the way of a deal, but held out hope that Microsoft CEO Steve Ballmer would return to the table eventually.
"I think in hindsight, one wonders if there could have been a reasonable compromise found between Yahoo and Microsoft if some of the personalities weren't the way they were," Rogers said on the sidelines of the Morningstar event.
"The return of one of the founders of Yahoo to running the company after the turmoil they had a couple of years ago probably was a big barrier to that. Because whenever you have the kind of legendary founder returning, it becomes a different dynamic," he said.
Hagstrom was even more direct. Continued...
