With Friends Like Carl Icahn…
Executive Suite, Joe nocera Talks Business
August 29, 2008, 4:33 pm
By Joe Nocera, New York Times
This week’s column recounts an obscure fight involving a company that few people pay attention to anymore, XO Communications. Once a darling of the telecommunications set — just like its competitors Global Crossing and Level 3 — XO fell on hard times, just like, well, Global Crossing and Level 3. After filing for bankruptcy protection in 2003 — a filing that cost Teddy Forstmann’s private equity firm its entire $1.5 billion stake in the company — XO emerged with a new chairman and majority shareholder: none other than Carl Icahn.
It’s not quite right to say this is a reader-generated column — I’m not that much of a webbie! — but it is reader inspired. Several XO shareholders wrote to me recently, complaining that Mr. Icahn was, in effect, a hypocrite. He would go on and on about the sins of the directors of companies like Yahoo and others that he was targeting, they said, yet he would commit the exact same sins at XO, where the board was made up of Icahn cronies, who simply rubber-stamped his deals, even though they hurt the other shareholders.
Back in the old days, when I was writing about my old friend T. Boone Pickens, people used to ask me if his rhetoric about shareholder rights was genuine, or whether those were just words he mouthed to make his corporate raiding sound more ennobling than it actually was. I always responded by saying that he meant every word he said — but that he never went after a company unless he thought he could make some money for himself as well.
When Mr. Icahn takes after one of the big boys with a laggard stock — a Yahoo or a Motorola or a Time Warner — he too mouths pieties about shareholder rights that I’m sure he believes. But as this column explains, when he’s the man in charge, shareholders really ought to run in the other direction. Let’s face it: the shareholders’ rights that Carl Icahn fights hardest for are the rights of a shareholder named Carl Icahn.
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