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Dear Mr. Berko:

Dear B.W.:

One reason Yahoo! Inc. (YHOO-$12.85) did not merge with Microsoft Corp. (MSFT-$18.89) is that board members Gary Wilson, John Chapple, Frank Biondi, Roy Bostock, Vyomesh Joshi, Arthur Kern, Eric Hippeau, Ronald Burkle, Carl Icahn and Maggie Wilderotter did not want to lose their $500,000 annual director’s stipend and perks worth another $125,000 to $160,000 a year. That’s a tough sinecure to give up for attending a board meeting a few days a year and rubber-stamping Yahoo! CEO Jerry Yang’s disastrous decisions.

These sycophants ought to be pilloried, jailed and sentenced to 50 years of penury for their failure to abide by the fiduciary capacity to which they were elected by Yahoo! shareholders. Their actions publicly flaunt the disrespect they have for the shareholders they were elected to represent. But that’s today’s corporate America, where greed, self-interest and malfeasance prevail, and shareholders are considered Third World riffraff.

The second real reason the deal never got traction is that those 10 directors had stock options for millions of shares, but 89 percent of their options had an exercise price above the price MSFT was offering. The only options that were in the money were those issued in 2007 with an exercise price of $27.50. But there were only about 400,000 shares that qualified.

Frankly, I’m amazed that YHOO shareholders have not sued Yang and his traitorous board members.

Now that the Google-Yahoo! deal has been scuttled by Google’s advertisers, YHOO is in talks with Time Warner Inc., operator of AOL, but I doubt much will come of that. Microsoft is also back in the game, but that was 19 points ago and I don’t think MSFT will be generous this time.

But hang on to your 2,000 shares of YHOO, because whoever makes the deal will pay a premium above market price. And as the company’s business is pummeled by the economy, its board of directors might be forced to act prudently.

There is one caveat, though. I’m hearing that whoever does the deal with Yahoo! might want Yang and his board of directors to indemnify them against likely shareholder lawsuits. Yes, hang on to your shares, and at this price another 2,000 shares looks like a good speculation. But I don’t trust Yang or any of the scurrilous toadies on his YHOO board.

AK Steel Corp. (AKS-$9.55) is a $7.5 billion manufacturer of high-strength, low-carbon, flat-rolled steel products. AKS focuses on premium-quality, hot- and cold-rolled carbon steel for which its primary markets are the auto industry, appliance manufacturers and construction companies. It’s hard for me to believe that JPMorgan, Goldman Sachs and Merrill Lynch had buy ratings on this stock just a few months ago, when AKS was trading in the mid $60. I find it equally difficult to believe that Banc of America Securities had a “buy” signal two months ago when AKS was trading at $25.

Oh, well. Those firms were probably competing for AKS’s investment banking business. Unfortunately for impuissant shareholders, that’s how Wall Street works. The weak U.S. economy, a significant slowdown in Europe and a stronger dollar have depressed demand and will limit steel usage for the foreseeable future. I’d buy 500 shares, but only as a rank speculation, because I’m hearing talk of a possible buyout by a larger competitor. And why not? AKS’s book value is a nifty $12, the company has well-managed, efficient and modern facilities that contribute to an impressive 6.1 percent net profit margin, a strong cash flow of $6 per share plus only $700 million in long-term debt.

I certainly wouldn’t buy AKS on fundamentals, but because the downside is maybe 15 percent, it may be a good rank speculative purchase. A competitor might recognize that there’s value here and buy your shares between $18 and $21 in the next six months. Then again, maybe not!

Please address your financial questions to Malcolm Berko, P.O. Box 1416, Boca Raton, Fla. 33429 or e-mail him at malber@comcast.net. © 2008 Creators Syndicate, Inc.