Yahoo confirms Bartz in charge; Can she save Yahoo?

Yahoo confirms Bartz in charge; Can she save Yahoo?

Summary: Yahoo has confirmed that Carol Bartz is its new CEO. Now the real fun begins: Turning around Yahoo amid a horrid economy and deciding whether to do a search deal with Microsoft.

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Yahoo has confirmed that Carol Bartz is its new CEO. Now the real fun begins: Turning around Yahoo amid a horrid economy and deciding whether to do a search deal with bartz21.pngMicrosoft. But first Bartz will need a No. 2 as Yahoo president Sue Decker will resign.

In a statement, Yahoo confirmed reports that Bartz will take the reins of the company. The news was reported by The Wall Street Journal, BoomTown and other outlets.

Bartz said:

"There is no denying that Yahoo! has faced enormous challenges over the last year, but I believe there is now an extraordinary opportunity to create value for our shareholders and new possibilities for our customers, partners and employees. We will seize that opportunity.”

Yahoo Chairman Roy Bostock was "excited" about Bartz and added that Bartz is the "exact combination of seasoned technology executive and savvy leader that the Board was looking for." Chief Yahoo Jerry Yang said:

"I believe Carol is the ideal person to take Yahoo! forward and I will be honored to be a resource to assist her in any way she finds helpful. I believe Yahoo!’s best years are still ahead of it."

There's no question that Bartz has the tech chops. Bartz, 60, is the executive chairman of Autodesk. She stepped down from CEO of Autodesk in April 2006. She had worked at Sun, Digital Equipment and 3M.

She also has the smarts. She dismisses the idea that Yahoo has to be either a tech company or media company and said she will be surrounded by smart people who can teach her. "I suspect I have some brain power to learn what it takes to understand media," she said. "I didn't know CAD when I joined Autodesk."

Also see: Ya-hoooo: There’s a new sheriff in town and her name is Bartz!

Will Bartz deliver a dramatic overhaul of Yahoo? That's unclear. Bartz sits on Cisco's board of directors with Chief Yahoo Jerry Yang. She also is on Intel's board with Yahoo president Decker. However, Decker has said that she will resign following a "transitional period." Decker's resignation signals that Bartz will pick a No. 2 that is probably more familiar with the online media and advertising markets.

Bartz's second in command will be critical given that some analysts are questioning her experience. In a research note Bernstein analyst Jeffrey Lindsay said:

While we think Ms. Bartz has been a good CEO at Autodesk, a B2B software company, we question the logic for her selection as CEO at Yahoo unless, of course, she is just keeping the seat warm until a deal is done with Microsoft. If so, we hope that a full acquisition of the business is being contemplated and not just a search deal – because finding a strategy for Yahoo without search would likely be an even greater challenge for a new CEO.

Lindsay also adds:

If there is no impending deal with Microsoft, then we think Ms. Bartz is not a natural choice of CEO to restructure Yahoo and drive it towards a new strategic vision for three reasons: (a) she has no consumer or advertising background – Yahoo makes most of its money in the deeply troubled display advertising sector; (b) she has no direct international management experience – the European and Asia-Pacific regions have not been key drivers of Yahoo!'s revenue growth as they have for competitors such as Google; (c) she has no obvious M&A experience – major Internet players like Google are completing one acquisition every 3-5 weeks.

The Microsoft question

As Lindsay notes, one of Bartz's biggest decisions will be focused on the lingering Microsoft question. Will Yahoo outsource its search to Microsoft so the software giant can set up a two-horse search race with Google? BoomTown reckons that a Microsoft search deal is all set for delivery.

Also see: The time is now for a Microsoft-Yahoo search deal

Microsoft has been amenable to a search deal with Yahoo and the math is compelling. According to Collins Stewart, Yahoo could get minimum revenue guarantees of $2.5 billion or more with $700 million in cost savings.

That cushion could allow Yahoo to better weather a downturn. However, there is another wrinkle: Yang has historically been opposed to a deal with Microsoft although he seems to have changed his tune in recent months (see video). In addition, Yahoo has lowered some of the takeover defenses against Microsoft.

If Yahoo cut a search deal with Microsoft you'd be left with a more focused company. No one aggregates eyeballs better than Yahoo. Bartz has to huddle with the Yahoo and braintrust and answer one key question: What is Yahoo?

To most folks, Yahoo is a media company. It needs technology, but doesn't necessarily have to be a technology company. In many respects, Bartz needs to bring an outside eye to Yahoo and come up with a plan.

An ugly downturn

Meanwhile, Bartz takes the reins of Yahoo just as an online ad slump worsens. The picture for online advertising isn't pretty even though it has secular growth over many years.

On Tuesday, Citi noted that online advertising in the U.S. will fall 7 percent from a weak 2008. In 2010, online advertising will recover, but not enough to offset the 2009 decline.

However, you could argue that the timing is great for Bartz. For starters, expectations for Yahoo are low. In addition, Yahoo has a war chest to fund acquisitions and take the pain of a recession--most likely with more restructuring.

Also see: Yang: Layoffs ‘very hard,’ ‘very necessary’

Given the economic backdrop, Bartz will have the mandate to make changes at Yahoo. One item on her agenda could be rationalizing brands. Some analysts have likened Yahoo to GM--a company with too many nameplates. Rest assured that Bartz will still have to figure out how to close the Google gap (click to enlarge chart), but she'll have the cover to operate.

Early reaction

Early reaction to Yahoo's move to name Bartz was a mixed bag with most analysts falling on the positive side of the coin.

Gartner analyst Allen Weiner in a blog post said:

Bartz is a solid and safe choice that will be an easy sell to the board and Wall Street. From her days at Autodesk, she is known as a fair and honest leader who is skilled at bringing diverse engineering and product groups together for a common goal. As a former VP of marketing at Sun during its halcyon days, she was instrumental in helping grow the company into a billion-dollar-plus giant.

However, Bartz lacks Web experience. As Gartner points out though Yahoo has plenty of that running around:

Bartz is not a Silicon Valley insider nor is she someone who brings a lot of Web experience to Yahoo!, but there’s plenty of that to go around at the once iconic Web portal. What the company lacks is a firm business leader that can instill confidence in Wall Street, major partners, advertisers as well as Yahoo employees.

Overall, I'd give the Bartz move a thumbs up and it appears she'll be able to leave her mark with Decker gone. As noted before Bartz may be in the Mark Hurd mold. Stay out of the press and just execute.

Topic: Social Enterprise

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16 comments
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  • No Tolls

    All the portals are failing...ebay, yahoo, microsoft.

    Putting a toll booth on the Internet is like putting one on the ocean...everyone can just go around you.
    jabailo1
  • Yahoo has new yodeller

    My advise is to expand the roll over ads such the Yahoo site becomes completely rather than just partially useless. In particular I would see flash content dinosaurs morphing into Chrysler concept cars and eating chunks of bailout cash along with segments of the screen. Then i would like to see these cars rapidly disintegrate into heaps of useless metal after they've broken down. These heaps should be interspersed into all the site content - news, games, maps, etc. In addition all the heaps should be rendered as slow, choppy videos that not-so-eventually cause the browser to come to a halt.
    heldCaptiveByCats
  • Yahoo confirms Bartz in charge: I say - Stay in charge...

    A memorable quote: "If Yahoo cut a search deal with Microsoft you???d be left with a more focused company."

    How focused is MS; "buy what you can't ever do?"

    Another quote: "Some analysts have likened Yahoo to GM???a company with too many nameplates."

    How many nameplates does MS have? 1000's? Look it up, 1000's (plus taxpayer bailout).

    What I like about Carol Bartz as Yahoo's new CEO is the fact that she is new! Let's work with that for awhile, new face, new idea's, new. Let the pundits proclaim the end of the world. I like "new". And of course, new means - "Don't sell out". You can't innovate from "buy the innovator"...
    Spacecase
  • Can we QUIT treating it like a financial transaction?

    Oh good grief - they are STILL sticking their head in the sand and only thinking about money with this Microsoft deal?

    Is that all that Yahoo is anymore - a chip in a poker game? A transaction to be made? More money to be thrown around and forget what's going to happen to the company?

    It makes me sick. I don't care if the math makes sense. Nothing else makes sense.
    CobraA1
  • Good choice

    Obviously web experience didn't help the last CEO of
    Yahoo, now did it? How about an even keeled person in
    Bartz that makes decent decisions. AFter all decisions
    made practically is the best thing a CEO can do for a
    company. Practical does not mean cheap or short sided
    either. It means what people want and with an eye on
    the future.
    FireThorn
  • Whatever she does, it won't resemble

    anything like what Yahoo is now. So, with that in mind, what's the point of being solvent if no one gives a damn.
    chrome_slinky
  • RE: Yahoo confirms Bartz in charge; Can she save Yahoo?

    I got to this article through a link that should have gone to an article about testers getting alpha versions of Office 14. Ummm. I really care not a whit what happens to Yahoo.
    medezark1
  • Forging Alliances

    With her background at Autodesk I see her at least forging alliances with Microsoft (Autodesk and Microsoft always had a close working relationship). I wouldn't be suprised to see working out something with HP too (another strong Autodesk partner).

    She may not have search engine experience, but she has connections.

    I think this move is good for Yahoo.
    kyron.gustafson9
  • RE: Yahoo confirms Bartz in charge; Can she save Yahoo?

    Yes she can, yes she will and as far as Yang, Filo and Bostock go...Guys, don't let the door smack you on the way out! It's a one-way door...SEE YA!

    That'd be her first big smart move and would impress the daylights out of Wall Street. That would say "I am in charge and we're not going back to the YingYangYahoo days.

    That's my .02 on the matter.

    Mike Murdock
    http://www.docmurdock.com/yahoo.htm
    ceo8
  • Not an insider?

    I'm amazed that Gartner would say "Bartz is not a Silicon Valley insider". She's worked in Silicon Valley for like 25 years or so as a VP and CEO, and sits on several major local boards. If she's not an insider who the heck is? What are they smoking over at Gartner?
    spambox2
  • Yahoo is doomed

    The company is doomed already, why bother?
    Gradius2
  • Ms Bartz should seriously take the search offer 33 Billion ; more.........

    Run a stock split now! And hold up the dollars on the table.Ms. Bartz you just made yourself fifty million dollars and saved Yahoo. Next, buy facebook.
    rtirman37
  • Microsoft could buy Google and still tank

    Microsoft just doesn't get the net! Who cares about Yahoo!
    Randalllind
    • They Used to when we owned Windows98; they were hot with the net. more...

      Windows LIVE Search is what we see today. I think that Microsoft will build a better Browser too. We have been limited online and still we will always have enough to look at and read about current events.

      But, in closing the browser is so important for the Windows operating system that secrecy is for the Mark of "Exellence' to protect the users in the coming forward with the purchase of Yahoo Search.
      rtirman37
  • A number two with experience needed?

    Quoting:

    Will Bartz deliver a dramatic overhaul of Yahoo? That???s unclear. Bartz sits on Cisco???s board of directors with Chief Yahoo Jerry Yang. She also is on Intel???s board with Yahoo president Decker. However, Decker has said that she will resign following a ???transitional period.??? Decker???s resignation signals that Bartz will pick a No. 2 that is probably more familiar with the online media and advertising markets.

    Bartz???s second in command will be critical given that some analysts are questioning her experience.

    [End quote]

    The infighting which resulted in the departure of Ms Decker must have involved strategic direction.

    Note that the implication is Ms. Decker was not familiar with the online media and advertising markets, given that a successor would be more familiar. And if experience were a weakness of Ms. Bartz, it might have been a strength of Ms. Decker.

    How likely the company's sale and which parts might be sold are not issues resolved in public. But I suspect they may have been largely resolved in private.
    Anton Philidor
  • RE: Yahoo confirms Bartz in charge; Can she save Yahoo?

    We can now look forward to Yahoo with a dongle.
    dunwin