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Icahn goes bargain basement hunting

Yahoo director and major shareholder Carl Icahn, in an SEC filing, outlines the reason for his recent increased stake in the struggling Internet search company.

Yahoo shareholder and director Carl Icahn went shopping for a pre-Thanksgiving deal, when he snapped up an additional slug of Yahoo stock, according to a Securities and Exchange Commission filing.

But as easy as it was to scoop up nearly 7 million additional shares, Icahn noted in his SEC filing there is nothing in his post proxy-fight settlement with the company that prevents him from dumping his position or hedging his bets.

The Reporting Persons acquired the Shares referenced in Item 5(c) below from November 24, 2008 through November 26, 2008, because they believed that the shares were undervalued.

Mr. Carl Icahn, who controls the Reporting Persons, is a director of the Issuer, having been selected on August 1, 2008, pursuant to an arrangement with the Issuer settling the proxy contest between the Reporting Persons and the Issuer. A copy of the Settlement Agreement is filed herewith as an exhibit and incorporated herein by reference. Mr. Icahn has informed the Issuer from time to time after his selection as a director that, as a major stockholder of the Issuer, he is in favor of pursuing a transaction with Microsoft relating to the Issuer's search business, for consideration to be negotiated by the parties upon appropriate terms to be agreed upon by them. Mr. Icahn has also had discussions with Microsoft regarding such a transaction but there are no understandings, written or oral, between Microsoft and the Reporting Persons.

The Reporting Persons may, from time to time and at any time, acquire additional Shares and/or other equity, debt or other securities, notes or instruments (collectively, "Securities") of the Issuer in the open market or otherwise and reserve the right to dispose of any or all of their Securities in the open market or otherwise, at any time and from time to time, and to engage in any hedging or similar transactions with respect to the Securities.

The likelihood of Icahn dumping his entire position in the near term would seem slim to none, given he is currently underwater from when he began amassing his 5.5 percent stake earlier this year. And while this most recent purchase will help bring the overall cost he's spent to amass these shares to a lower per share price, it may be awhile, if ever, before he'll receive his payday in a Microsoft deal.