News digest for July 14, 2006

How To Fight Off Shareholder Activists
Make friends with your activist shareholders, says Chris Young, mergers and acquisitions research director at Institutional Shareholder Services. Executives who develop good relationships with activists, compromising with instead of shunning them, actually do a better job of keeping them at bay–and keeping their own jobs. “Companies that fall back on name-calling, labeling the investors as raiders or short-term investors–that tends not to work,” Young says.

More than 100 firms probably backdated options
“I am confident that the number of companies who have done this is much higher” than the number currently being investigated, said Lie, who plans to release new research in the coming weeks.

FBI takes options probe to Silicon Valley
Investigators form task force to look at practices of several Bay Area companies as part of nationwide probe. “The FBI has a duty to the investing public to examine whether companies … are violating securities laws,” said Federal Bureau of Investigation Special Agent in Charge Arthur Balizan, in San Francisco.

Merger arb hedge funds do well in first half of 2006
Hedge funds that bet on the outcome of mergers and acquisitions are among the top performers in the industry so far this year as deal activity has surged and bids have been raised to clinch some high-profile combinations.

Microsoft, Yahoo connect IM services
The move creates a global community of nearly 350 million accounts, the companies said. The beta service is being launched globally in 15 localized languages.

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