Behind the Yahoo/Microsoft drama

Microsoft sign in Herndon, Va., and Yahoo sign in Sunnyvale, Calif.

TEXT OF INTERVIEW

Renita Jablonski: Microsoft walked away from its bid for Yahoo last month, but the story keeps getting more interesting -- or exhausting, depending on who you are.

This week, billionaire investor Carl Ichan wrote a letter to Yahoo saying the company better scrap an employee severance plan. The plan drove up potential costs of a Microsoft takeover. Icahn says if Yahoo doesn't let go of that severance proposal, he'll keep going with his attempt to ask shareholders to fire the entire board at the company's August 1 meeting.

Kara Swisher is co-editor of the Wall Street Journal's All Things Digital. She's spent a lot of time with the stars of this drama recently, and a lot of time writing about it. Kara, we also heard this week that Mr. Icahn was in contact with Microsoft, is this true?

Kara Swisher: I would say 10 percent of what he says is true, and I just don't know what 10 percent. Some people think that he's carrying water for Microsoft by beating up on Yahoo. You know, he could have been in touch with them, but I don't think he's been in touch with them in any significant way. It's not some wild conspiracy theory, I don't think.

Jablonski: So what do you think Yahoo should be doing right now?

Swisher: Well, we had a conference last week and we had every player in this drama there. We had Rupert Murdoch, who has been involved in head of News Corp, we had Jerry Yang . . . the president and CEO of Yahoo, who is the center of this drama. We had Steve Balmer and Bill Gates on stage. And a lot of people feel -- and so do I -- this deal has to happen if Microsoft has a prayer of getting within close shooting distance of Google. Because right now, Google is sort of got a runaway train that nobody can catch. And without that deal, Microsoft is a very small share of the market and declining.

Jablonski: It seems a lot about how these companies are able to play the PR game. I can't help but feel like . . . I think this morning, there's a story about Yahoo with this new toolbar.

Swisher: Yeah. The problem is if a company's still operating, and so they've got to keep releasing stuff, and some of it's significant, and some of it is sort of vaporware, like all technology companies. In fact, Yahoo is well-known for not touting things when they should. But you know, all these companies have to be in the game of trying to best each other constantly. And next week, Apple is going to be unveiling the 3-G phone, and today Microsoft made some bogus announcement so that it could sort of press, because the whole tech industry next week will be riveted on Apple, as it always is.

Jablonski: Any heads up you can give us about that Apple phone? Anything to watch for?

Swisher: Yeah, I mean I think there's a lot of rumors. I mean, it's not gonna be a 3-G phone. It may have a better battery life. It has things like that which would sort of bring the price down rather significantly, I think it's $200. But everyone's acting like this is like the biggest . . . I love, Steve Jobs sort of, it's funny, is everyone's sort of struggling all over the tech industry, Yahoo and Microsoft . . . like he just effortlessly sails in and brings out another new product that, you know, everybody ooo's and aah's over.

Jablonski: You are going to have a fun summer, it sounds like.

Swisher: Yeah, I know -- it never slows down in tech, it's funny.

Jablonski: Kara Swisher is co-editor and columnist at AllThingsD.com. Thank you so much.

Swisher: Thanks a lot.

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