Eli Harari Wins the "Dumber than Jerry Yang" Award

Sandisk's CEO managed to destroy a better offer to acquire his company than Yahoo's.

Sandisk's CEO Eli Harari and Yahoo's Jerry Yang both suffer from an amazing amount of hubris.  They both founded their companies.  They both believe in their companies.  They both believed that they were acting in their shareholders' best interests by trying to keep their companies independent.  They both entered into value-destructive agreements to keep their companies independent.  Ultimately, they both failed their shareholders.

Jerry Yang believed that Yahoo had great hopes and part of his reason for wanting to keep the company independent is that he didn't want to get Microsoft stock for his company.  He always hated Microsoft, which is understandable.  He basically gave most of the company's revenue generation opportunities to Google in order to try to fend off Microsoft.  He destroyed value, but shareholders arguably would have lost anyway had they stayed in Microsoft stock.

Eli Harari also runs a company that is hemorraging massively as its products look to be a commodity.  Yet, that didn't stop him from refusing a $26.50 offer from Samsung.  In order to finally get Samsung to withdraw its offer, he also engaged in a stupid transaction with their competitor, handing Sandisk's interest in a JV Japanese production facility to Toshiba at below market.  To make matters worse, unlike Yang, he had a cash offer in a collapsing global economy.

It seems that Harari believes that it is a down cycle for semiconductors and that when it comes back Sandisk will be huge.  He believed that Sandisk ultimately is the $75 stock that it traded at 2 years ago.  He may prove to long-term shareholders that he is a genius.  However, short-term shareholders aren't sitting around to find out.  They hit the door today.  And, Harari looks awefully foolish with his stock at $10 today.

Thanks Eli!

Aron Livrone
Aron Livrone: Aron is a 2008 Wharton MBA with a consulting background prior to moving from Sweden to the US to begin his MBA.

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