Yahoo warns shareholders on Icahn's plans

Yahoo today warned its shareholders that billionaire Carl Icahn's agenda presents a "significant risk" to their investment, and reiterated that it would only sell itself to Microsoft under the right terms.

The public letter posted on its website today is Yahoo chairman Roy Bostock and chief executive Jerry Yang's latest appeal to shareholders ahead of its annual meeting on 1 August to fend off an attack from activist investor Icahn.

Icahn owns about five per cent of Yahoo shares and has aligned himself with Microsoft to speed a sale to the software company. Meanwhile Time Warner has stepped up separate talks with Yahoo and Microsoft over selling its AOL Internet division.

In the letter, Yahoo said the alliance between Icahn and Microsoft "continues to make misleading statements about their plans for Yahoo."

"Your board of directors believes strongly that the Icahn-Microsoft agenda - as presented to us jointly last week - will destroy stockholder value at Yahoo, serving only their very narrow special interests, clearly not your interests," Yahoo said.

Yahoo added that it is "preparing to implement (its) recently signed commercial agreement with Google that will increase cash flow".

The company said Microsoft and Icahn's latest proposal to buy its search advertising business represented "somewhat of an improvement" but was still not a good offer.

"The Icahn/Microsoft proposal was more 'smoke and mirrors' than objective reality," the letter said.

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