Power Sheet - February 23, 2016

Who’s your friend and who’s your foe? For business leaders the answer is often fluid, as three developments in this morning’s news illustrate.

-Facebook chief Mark Zuckerberg and Apple’s Tim Cook could be enemies on several dimensions. They compete to hire top tech talent, and as Facebook envisions new ways to profit from its 1.6 billion active users it could easily encroach on Apple’s territory by selling music or offering payment services. But yesterday they were friends, with Zuckerberg declaring his support for Cook’s refusal so far to obey a court order in the case of the FBI and a San Bernardino gunman’s cell phone. That stance took courage, since Cook’s position is not strongly popular with the public, and Zuckerberg didn’t have to say a thing. Google chief Sundar Pichai, another Cook rival in some ways, has also publicly supported him. They all share a desire to resolve privacy and encryption issues along similar lines, and a united front of technology’s highest-profile, most valuable companies helps them all.

-Yahoo CEO Marissa Mayer and Starboard Value Fund chief Jeff Smith would seem to be flat-out enemies, plain and simple. Mayer wants wants more time to turn around Yahoo, which has been struggling and retrenching for well over a year, its stock price propped up only by the value of Yahoo’s valuable stakes in Alibaba and Yahoo Japan. Smith has been arguing for months that Mayer has had her chance and now it’s time for Yahoo to sell its operating businesses ASAP before they lose more value. He’s even waging a proxy fight against the company and is set to announce his slate of competing board candidates soon. Could Mayer and Smith ever be allies? Only in the sense that Smith, to the extent he’s successful, could be saving her from herself. Every day it becomes more difficult to envision how Mayer’s turnaround strategy, or anyone’s, could work. Would Yahoo shareholders have fared better if Mayer and the board had regarded Smith as a potential ally from the start? Yesterday a special committee of the board officially hung a For Sale sign on the company’s operating businesses, but whether it will accept any offers it may receive remains to be seen.

-CNBC revealed yesterday that Honeywell CEO David Cote has been trying to persuade United Technologies chief Greg Hayes to merge their companies. Cote apparently hasn’t threatened to go hostile, so the two bosses remain fierce competitors in aircraft tech systems and commercial building technologies who could in theory be the best of friends if they could combine and prosper. It’s hardly a new idea; United Technologies tried to buy Honeywell in 2001 but was outbid by General Electric (Cote’s old employer), and European antitrust authorities then prohibited the deal. This time Hayes has reportedly concluded that antitrust doom would await the deal again, so he’s refusing to participate. But the mere report of the possible acquisition by Honeywell caused UTC’s long-declining stock to pop yesterday.

As the British statesman Lord Palmerston famously said in 1848, “We have no eternal allies, and we have no perpetual enemies. Our interests are eternal and perpetual, and those interests it is our duty to follow.” Successful business leaders believe the same thing.

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