Tuesday, June 17, 2008

Wall Street Journal: Court Denies Yahoo Holders Expedited Case

June 17, 2008; Page B3

A Delaware Chancery Court judge denied a request by Yahoo Inc. shareholders to expedite their case against Yahoo as investor Carl Icahn weighed whether to proceed with his proxy battle to replace the Yahoo board.

People familiar with Mr. Icahn's thinking say that he hasn't abandoned hope of winning at least some board seats, but that he is still examining the merits of a recently announced search advertising deal with Google Inc. which Yahoo announced as a way to generate incremental operating cash flow last week.

Separately, one major Yahoo shareholder said in an interview Monday that now that the Google deal has been announced -- and Microsoft and Yahoo are no longer discussing an alternative -- the shareholder is contemplating backing a more limited slate of nominees as opposed to trying to replace the entire Yahoo board. Another Yahoo investor, Eric Jackson, published an article on TheStreet.com urging shareholders to support a compromise between Yahoo and Mr. Icahn by voting for a slate of five existing Yahoo board members and four of Mr. Icahn's nominees.

Yahoo received some more good news Monday as Delaware Chancellor William Chandler denied shareholders' request to bring their case to trial before Aug 1, the date of Yahoo's annual shareholder meeting.

The plaintiffs -- two Detroit pension funds -- were pushing for the court to expedite the case on the grounds that Yahoo's recently announced advertising deal with Google was intended to discourage Yahoo shareholders from supporting Mr. Icahn's effort to replace the Yahoo board.

The pension funds sued Yahoo in February over the Internet company's handling of an acquisition offer from Microsoft Corp.

In his letter, Chancellor Chandler asked both sides to confer to set a "prompt" schedule for hearing Yahoo's motion to dismiss the case. He wrote that the court could decide that motion before Aug. 1.

--Gregory Zuckerman contributed to this article.

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