Bob Caswell - Latest Comments in Yahoo Shows How The Wall Street Financial System Is Broken

Re: Yahoo Shows How The Wall Street Financial System Is Broken

Siddiqua — Tue, 17 Feb 2009 23:33:10 -0000

I feel like they can basically say or do whatever they want and claim that it’s maximizing shareholder value.

Re: Yahoo Shows How The Wall Street Financial System Is Broken

globalrs — Sun, 07 Dec 2008 15:22:14 -0000

It's already bad enough. Now that AIG has sold their subsidiary AIA to an Indian firm and CEOs of some of AIA's subsidiaries worldwide jumping ship, it is clear that the company is destined for downfall.

People have lost confidence in AIA meaning some will not be renewing their policies or canceling them out right. What it means is that Insurance Agents will be out of job soon. They will also not be able to convincingly sell other financial products.

How about the Banks, Investment Companies and Fund Managers? They will be hard hit as well. Companies and private investors will thinking twice about speculating or investing in Unit Trust, Hedge Funds as nothing seems like a safe bet now.

People are talking about when the bottom will happen. It will happen when we go into recession, depression and probably only recover near Obama's end of term in 50 months time.

Re: Yahoo Shows How The Wall Street Financial System Is Broken

bbb — Sun, 03 Aug 2008 12:44:08 -0000

Very much not an ideal system of incentives - and again to emphasize it - it doesn't matter whether or not the merger made sense for Microsoft - that concerns Microsoft shareholders.

This article is about Yahoo shareholders. And what matters is that Yahoo shareholders would have instantaneously made a ~62% return, yet, Yahoo management rejected the offer. The only possible explanation is that Yahoo management is either magical - or, doesn't really care about the shareholders (owners), and instead care about their own claim to power (social status). That's a non-ideal situation for an economy.

Re: Yahoo Shows How The Wall Street Financial System Is Broken

bobcaswell — Sun, 03 Aug 2008 12:18:41 -0000

Right. My personal favorites are examples like Dell's ex-CEO Kevin Rollins getting $5 million for being fired after making a mess or HP's ex-CEO Carly Fiorina getting $21 million for being fired after HP lost one third of its market value:

http://bobcaswell.com/2007/02/21/dell-ex-ceo-ge...

Re: Yahoo Shows How The Wall Street Financial System Is Broken

Tom Swirly — Sun, 03 Aug 2008 11:53:31 -0000

You're welcome!

I agree completely that Wall Street is broken. This isn't even the worst example, which I believe is the *negative* correlation between CEO salaries and stock performance. In a rational world, a CEO would be rewarded for good performance and penalized for bad performance.

Re: Yahoo Shows How The Wall Street Financial System Is Broken

bobcaswell — Sun, 03 Aug 2008 11:14:40 -0000

Tom,

Thanks for reiterating my point and also proving that differing opinions on Microsoft or Microsoft business models is pretty irrelevant to the discussion at hand.

Re: Yahoo Shows How The Wall Street Financial System Is Broken

Tom Swirly — Sun, 03 Aug 2008 11:02:19 -0000

[Disclaimer: I don't like Microsoft's products or business model and I work for a competitor.... but.... ]

"it may just be that strategically and financially no one believed the whole deal made any sense and hence Wall Street did work and rejected the deal..."

What exactly does that sentence mean? From the point of view of the stockholders, someone offered to buy a dollar bill from them for $1.30 or so. What possible rational, economic reason would the *stockholders* have to reject this deal?

Re: Yahoo Shows How The Wall Street Financial System Is Broken

bobcaswell — Sun, 03 Aug 2008 10:57:09 -0000

There's a reason I left strategy out of this particular discussion. It's irrelevant to the point I'm making. Also, your points only make sense if we're talking about Microsoft shareholders or possibly shareholders that own stock in Microsoft and Yahoo.

I'm talking about Yahoo shareholders specifically. From the Microsoft perspective, "strategically and financially," as you put it, sure, there are plenty of questions and a whole separate discussion.

But from the Yahoo shareholder perspective, a sale should have happened. This would have maximized shareholder value. And a sale did not happen. Again, if we can claim that Yahoo is still somehow magically maximizing shareholder value by rejecting a $20 billion premium, then we claim that they are maximizing shareholder value regardless of any decision they make (good or bad).

That's a broken system, and that's my point.

Re: Yahoo Shows How The Wall Street Financial System Is Broken

Patrick — Sun, 03 Aug 2008 10:21:08 -0000

Yahoo! board rejected MS offer. Yahoo! board was re-elected, Icahn is now participating on the board. You could maybe argue that given where things are, Icahn does would prefer to play along than sell and take a loss - but as hard as may be for a Microsoftie to admit, it may just be that strategically and financially no one believed the whole deal made any sense and hence Wall Street did work and rejected the deal...

All we knew of strategy was that the benefit from deal was that MS online division would stop losing money. Hard to make any kind of financial forecasts to value NPV of MS stock issued from acquisition ofr that type of strategy and with little detail. So perhaps it was better the devil you know than the devil you know given that you could not see how shareholder value of MS stock would change much with acquisition given lack of detail and so shareholders felt value better maximized with current Yahoo! management...