Is there any positive perspective on this guy too? In this interview (http://www.youtube.com/watch?v=CTIp9ebXAh0) he kind of makes sense with `restructure to concentrate on shareholder value` and `restructure for short term or sure profits` line of thinking...
When Carl Icahn Ran a Company: The Story of TWA
111–120 of 127 posts
Re: When Carl Icahn Ran a Company: The Story of TWA
#112Earlier quoted context omitted.
Carl Icahn is scum. He does serve a purpose, and scum cleans out scum every once in a while. But I believe he is a virus and a destructive force dismantling companies for personal gain. Although he is scum, if there were virus's like him, large companies would live on forever and have nothing to fear. Interesting mechanics at work.
I upvoted you, but I'm not sure I agree. If you look at people who've really disrupted industries, they don't tend to be like Carl Icahn. Increasingly, as I read up about what happened during the M&A boom of the '80s, it does seem to me that finance played an essentially destructive role during that decade and the three that have followed. I don't see very many advances that would have been impossible without the fin…
Leveraged buy outs aren't about disruption, they're about efficiency. Any company worth doing a hostile takeover of has a working business model (product market fit) and the acquirer is betting they have a lot of expenditures that are basically irrelevant to what they do to make money, or they are running at far below full utilisation on some resources or capacities, which can be cut without materially effecting anything the customer really cares about.
It usually sucks to be the employee of a company that's just been LBOd because layoffs are almost certainly coming, and whether they are or not, you're going to have to do more work, probably with less resources.
But for society as a whole it should be a win if competently executed; getting the same product/service out of less resources leaves the now excess resources free to be used elsewhere.
Re: When Carl Icahn Ran a Company: The Story of TWA
#113The article left me with lots ofdoubt... Take this sequence of events: Bought 20% of company. made it private. Sold London route. So, how can someone with 20% make a company private? And how can someone having his shares bought back after company went private still command it to sell anything? Was he ceo all along?
I don't know the details but from the description he'll have done through the form of a leveraged buyout.
Icahn secures a loan from a bank (or group of banks/financiers - possibly even one of his other companies, I don't know what the law is like in this regard in America) to purchase enough shares to take the company private.
Here's the 'trick' though. That loan is not secured by Icahn, it is secured by the company he has just "bought out" - the repayments of the loan being secured against the companies current capital assets and future profits. In effect Icahn gets the company to take out a loan which he uses to take control of the company.
Obviously there needs to be enough shareholders willing to sell for this to work but if the leveraged buyout offers a great enough premium then they'll normally find enough willing sellers.
Re: When Carl Icahn Ran a Company: The Story of TWA
#114Andreeson's defense seems to be that Icahn has had as many conflicts of interest and selfish motives on boards as he has, if not more. I'm not sure that's a good defense: "He's killed twice as many people as I have, and he's been at it longer, too!" When people so alike bicker like this in movies, they're usually about a minute away from kissing.
Andreessen doesn't care about the moral dimension, he cares about the practical dimension. This series of blog posts is aimed at EBay shareholders - he's trying to convince small-time individual shareholders that if they ally themselves with Icahn they're going to get screwed. (I assume he's running a similar campaign in person with the big-time institutional shareholders.) Smart money probably knows they're going to get screwed by allying themselves with Icahn, but there is an awful lot of dumb money on Wall Street, and they are easily swayed by just a little information.
Re: When Carl Icahn Ran a Company: The Story of TWA
#115I kind of find fault with pmarca recusing himself from the eBay board during the skype deal in spite of his conflict of interest, as he's clearly 100x more intelligent than anyone else on the eBay board. I'd rather have a smart guy who has particular knowledge advocating for my interests, even if he has some biases which he discloses, rather than some former CEOs of eBay (not exactly winners there) or some big dumb fund people, which is what you're left with otherwise.
Re: When Carl Icahn Ran a Company: The Story of TWA
#116Not sure that's the most sophisticated PR strategy. One post looks like a rebuttal, 8 look like an obsession.
He's trying to create FUD here, not look good. As the incumbent, he has the advantage; if all shareholders are paralyzed into inaction because all the major players look like assholes, he wins. He only loses if a majority of EBay shareholder votes believe that Icahn will generate shareholder value, hence he wants to make abundantly clear that Icahn destroys shareholder value to enrich himself.
Re: When Carl Icahn Ran a Company: The Story of TWA
#117Earlier quoted context omitted.
I upvoted you, but I'm not sure I agree. If you look at people who've really disrupted industries, they don't tend to be like Carl Icahn. Increasingly, as I read up about what happened during the M&A boom of the '80s, it does seem to me that finance played an essentially destructive role during that decade and the three that have followed. I don't see very many advances that would have been impossible without the fin…
Leveraged buy outs aren't about disruption, they're about efficiency. Any company worth doing a hostile takeover of has a working business model (product market fit) and the acquirer is betting they have a lot of expenditures that are basically irrelevant to what they do to make money, or they are running at far below full utilisation on some resources or capacities, which can be cut without materially effecting anyt…
well most of the time its about asset stripping and loading up a company with expensive debt and selling it before the chickens come home to roost as a recent number of company collapses in the uk proves)
Or its about forcing companys to do trendy things - bad for the long term by selling off core assets on the cheap BT selling O2 is a classic example.
Re: When Carl Icahn Ran a Company: The Story of TWA
#118Earlier quoted context omitted.
That's not capitalism, that's greed. Sadly, many of the greedy are hiding behind the banner of capitalism, but don't be confused.
It's exactly capitalism. Carl Icahn, capitalist, used capital to establish control over TWA and, having done so, exercised his property rights in a way to maximize profit and return.
I don't disagree that Carl Icahn is a capitalist, so are Warren Buffett and Marc Andreesen (now).
Look at the definition of capitalism "an economic and political system in which a country's trade and industry are controlled by private owners for profit, rather than by the state."
Nowhere in the definition does it state that a capitalist must be a greedy ahole who destroys companies and the lives of employees in order to fill his own pockets.
Sadly, we see too many examples of this, but it isn't capitalism, and we need a better label for it, or we risk throwing the baby out with the bath water.
Re: When Carl Icahn Ran a Company: The Story of TWA
#119Earlier quoted context omitted.
Carl Icahn is scum. He does serve a purpose, and scum cleans out scum every once in a while. But I believe he is a virus and a destructive force dismantling companies for personal gain. Although he is scum, if there were virus's like him, large companies would live on forever and have nothing to fear. Interesting mechanics at work.
I upvoted you, but I'm not sure I agree. If you look at people who've really disrupted industries, they don't tend to be like Carl Icahn. Increasingly, as I read up about what happened during the M&A boom of the '80s, it does seem to me that finance played an essentially destructive role during that decade and the three that have followed. I don't see very many advances that would have been impossible without the fin…
Finance probably did play a destructive role and it still does mainly because like you said its not the dividend not the big picture that matters. However, going public is one of the prime factors that subject a company to that world. Staying private keeps you "safe" to a certain degree.
Once you are in public domain I think in the long run being subject to all sorts of positive and negative inputs e.g Icahn, Pershing square weed out weak links and bad fruit. Many times good fruit gets thrown out too without realizing the tree will not yield any more produce if done so.
Finance has a very simple function in terms of what it does for companies. If its making money => it works. If it WAS making money and isn't now => it can still make money with change.
Re: When Carl Icahn Ran a Company: The Story of TWA
#120For those that don't know what is going on, here is the backstory: Carl Icahn has recently bought a bunch of ebay stock. He has claimed the company is mismanaged. He has also personally attacked Marc Andreesen. Here is the accusation from Ichan: 1) Marc Andreesen was/is on ebay's board. 2) While on ebay's board, Marc bought most of Skype from eBay. 3) He flipped Skype to Microsoft in less than 2 years, earning himsel…
I hate to agree with Ichan, but eBay is probably one of the worst run brands ever. 15 years ago, my grandparents were excited about buying and selling crap on eBay, and they know nothing about technology. Nowadays, it's a place to get ripped off. I have to say that I haven't even thought about eBay for many months.
They've averaged ~13% growth year over year since 2008, doing 16 billion last year. Not sure what your metric is but I hardly think that qualifies as, "worst run brands ever."