Kerkorian’s Folly: Putting Money Into Ford (F)(GM)(MOT)(BBI)(YHOO)(MSFT)

Kirk Kerkorian may be able to join Carl Icahn as a billionaire who has taken a lot of mad gambles recently. According to Reuters, "Kerkorian’s investment vehicle Tracinda Corp said it would continue to tender for 20 million Ford (F) shares at $8.50 each, despite an 18 percent decline in the shares since the offer was launched on May 9."

Over the last year or so, Icahn managed to dump money into Motorola (MOT) on the assumption that its handset business could be fixed or sold. Neither has happened. Its global share has gone from a peak of 22% to under 10%. It has no products to keep the slide from continuing. MOT trades at just over $9, down from a 52-week high of $19.58. Based on any available information, there is no reason to think the stock price has a future at better levels.

Icahn has also dumped money into Yahoo! (YHOO) on the assumption that he can win a proxy fight and take control of the company. At that point, Microsoft (MSFT), which tried to purchase the portal company for as much as $33 but was turned down, can do a deal with Icahn. The trouble is that Redmond now says it has lost interest in the acquisition.

Although the event was longer ago, it is worth remembering that Icahn took a big piece of Blockbuster (BBI) and put some of his own people on the board. The digital age has ruined the movie rental company’s business model and competition has put it into a box.

Kerkorian must not have spent enough time in Detroit. Ford and GM (GM) are on a death watch. They may not have the capital to make it through the next two years. Domestic car sales are in deepening trouble because of a recession and the high price of gas. Ford recently abandoned its own hope of making money in 2009. The US auto makers will cut more costs, but there must be a limit to that.

Kerkorian is living proof that the very rich can be stupid.

Douglas A. McIntyre