Yahoo's latest plea to shareholders has a familiar political tone

It would appear one or more former managers of defeated presidential campaigns may have joined Yahoo, as it latest spin on financier Carl Icahn's plan to couple Microsoft with Yahoo's search business uses a number of familiar phrases.

"Mr. Icahn can't make up his mind about what he thinks will work for Yahoo," reads the company's latest plea to shareholders this morning, signed by Chairman Roy Bostock and CEO Jerry Yang. They tell a story of Icahn initially suggesting that Yahoo sell itself outright to Microsoft for $34.75 per share -- a price we haven't heard quoted before. But Icahn didn't really do due diligence, the statement alleges, otherwise he would have known that Microsoft had already walked away from any kind of a full takeover deal.

"Recognizing that a sale to Microsoft might not be an option, Mr. Icahn said as an alternative that we should enter into an agreement with Google (which we were already negotiating and subsequently signed), and that we should walk away from Microsoft's search-only proposal (which we did after careful evaluation of that proposal)," this morning's statement continues. "Then, in an extraordinary flip flop, Mr. Icahn teamed up with Microsoft and embraced their latest joint search-only proposal -- even though it involved significant execution and operational risks and was fraught with flaws that made the 'headline value' asserted by Microsoft and Mr. Icahn more illusion than reality."

That very potent phrase that worked its wonders during the 2004 Republican National Convention, rears its ugly head (or rather, ugly feet) again later: "Certainly Microsoft is a well-respected and successful company and we have been clear that we are fully prepared to do a deal with them. But Microsoft's flip flops and inconsistencies over the past five months are so stupefying that one can only conclude that Microsoft was never fully committed to acquiring Yahoo either because: * Microsoft can't decide what is and isn't strategically important to its online business; or * Microsoft is more interested in destabilizing a key competitor so that it can either enhance its competitive position or buy our highly valuable search business--and the enormously desirable intellectual property associated with it --at a bargain basement price."

Two other familiar political phrases also crop up: At one point, Yang and Bostock refer to Icahn and Microsoft as an "odd couple" with similar interests but "keenly diverging agendas." And elsewhere, they take Icahn to task for crafting proposals that have more "headline value" than shareholder value -- in other words, that are intended to keep Icahn in the news in order to make his proposals seem more valuable than they may actually be. Both tactics have their parallels in the 2008 presidential campaign, particularly on the Democratic side.

But back to the main issue at hand: Today's statement from Yang and Bostock is one of the first where Yahoo mentions its "search business" as a discrete entity. Previously, the company had made the case that its search function was inseparable from its advertising platform, and that there would be no real way to technically separate the two so that Microsoft could manage one part and Yahoo the other.

Today's statement itself flip-flops on one point in particular: characterizing Microsoft and Icahn as paired or working together in places, while in others suggesting that neither left hand knows what the other left hand is doing.

Perhaps the key "take-away" from today's statement, though -- its "headline value" -- is the appearance of calling the "Odd Couple's" bluff. Yes, it will deal with Microsoft, but only with Microsoft. Yes, there's a discrete price on the table, and it's back to $33 -- which is what Microsoft was believed to have offered months ago before CEO Steve Ballmer walked away from the table. Yes, Yahoo would negotiate a "search business" deal -- again, solely with Microsoft.

The key portion of the statement reads, "First, we will sell the entire Company to Microsoft for $33 per share or more if Microsoft will negotiate a transaction that delivers certainty of value and certainty of closing. This is the simplest, most straightforward way to maximize value for you. Second, we remain open to selling only search to Microsoft as long as it provides real value to our stockholders and resolves the substantial execution and operational risks associated with the separation of our search and display businesses."

Some months back, Yahoo characterized $33 per share as undervaluing the company; that appears to no longer be the case. Historically, Yahoo has characterized its search business as inseparable; that too appears no longer the case. If Yahoo thinks Ballmer's positions were intended to undermine Yahoo's foundation, it may be right. The board may want to look down to see whether those new, floppy-looking shoes are a good fit.