Yahoo doesn't need new CEO, it needs to sell, say analysts

Yahoo doesn't need new CEO, it needs to sell, say analysts

Summary: Yahoo is widely expected to sell out before a new CEO is named. At the least, Yahoo will undergo some financial engineering to monetize its Asia assets.

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Carol Bartz is out as CEO of Yahoo and analysts are widely expecting the company to pursue strategic alternatives including an outright sale or monetization of the company's Asian assets.

Yahoo ousted Bartz via phone late Tuesday after more than two years of drama, disappointing quarters and executive turnover. An executive committee and board will determine Yahoo's fate. CFO Tim Morse becomes the interim CEO. The common questions among Wall Street analysts boiled down to two words: Now what?

The consensus view appears to be that there won't be another CEO named. Yahoo is likely to sell itself before it finds a new leader. Patience at Yahoo as well as Wall Street is thin. Simply put, Yahoo is about to go through yet another transition as it looks for its fourth CEO in four years.

Also: Yahoo's Bartz era: The non-stop drama in her own words, Bartz out | CNET: Blown Microsoft sale, Bartz gone, Time to sell? Bartz timeline Roundup | CBS News: Yahoos in chargeTechmeme

Here's a look at some of the analyst comments on Yahoo's future:

Jefferies analyst Youssef Squali:

Given the succession of three CEOs in less than four years, it'll be challenging for the board to find an A player who'd be willing to take on the daunting task, and for investors to wait for yet again another turnaround to happen. We believe that Yahoo! sells itself before a permanent CEO is announced.

We believe a number of strategic options could be on the table for the company, including an outright sale to a large media company like News Corp., or a more convoluted structure that would involve private equity, Microsoft, AOL and may be even Alibaba Group. In all, we believe that it is more likely that the board reaches an agreement to sell the company or parts of the company before a new CEO is found.

Barclays Capital analyst Anthony DiClemente said that Yahoo could hire an internal candidate, which would result in a shorter turnaround timeline, go with an outsider or sell assets or the entire company. DiClemente said:

We believe this leadership change extends Yahoo!’s turnaround timeframe and could further destabilize its sales force—which is also going through a transition—lead to more employee departures, and accelerate its share losses in display.

Wells Fargo analyst Jason Maynard:

In recent quarters, the Search business has underperformed, and its core Display advertising business has also deteriorated. The relationship with Alibaba CEO Jack Ma has also clearly been strained, leading investors to question Yahoo's ability to monetize its strategic Asian assets. Moreover, the company’s attrition rate among engineers and managers over the past year has been abnormally high. We think there is now an opportunity for someone different to come in and effect some positive changes at the company, although it clearly cannot happen overnight.

Evercore analyst Ken Sena:

While a sale of Yahoo! or its Asian asset stakes remains a perennial theme, we view the Leadership Council and Board remarks as evidence that the Board is becoming more keenly aware of its current opportunities (or challenges, rather). Yahoo management has had issues in the past with clearly defining what these are for investors.

Deutsche Bank analyst Jeetil Patel:

Shares of Yahoo! traded higher in after-hours trading on the news, as emotionally exhausted investors have new reason to hope to see value unlocked in Yahoo shares with this change. A new CEO may be better positioned to negotiate with partners in China were relations strained under Bartz. In addition, a private equity buyer could seek to unlock the value of the Asian assets and leverage up the core of Yahoo, which continues to generate cash flow despite competitive and operational challenges.

Topics: Social Enterprise, Banking, CXO, Enterprise Software, Legal

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9 comments
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  • RE: Yahoo doesn't need new CEO, it needs to sell, say analysts

    So, engineers and managers leaving and failure to monetize Asian assets.<br><br>I didn't know the engineers and managers cared. Ms. Bartz really misunderstood that point.<br><br>I'm three letters shy of being an MBA, but it seems to me that Yahoo! is in its straits because it didn't adapt to the 1-2 disruption of Google and mobile. Ms. Bartz's tactical decisions to winnow off experimental but profitless ventures in order to focus on the main profit centers, while popular with Wall Street, was doubling down on past successes.<br><br>Which is as easy for me to say as it is for an analyst to say that some buyer can come along and monetize those Asian assets.<br><br>Any way, best wishes to all involved. And, how lucky is Ballmer? He almost paid 45 billion for Yahoo! (I think the "!", alone, was going to cost 3.7b), and was nigh-on petulant when people said no to his money.
    DannyO_0x98
  • Meet the barber

    Lemme see if I get this straight. Turning the company around is a "daunting task," and it would be difficult to find "an A player" to come in and attempt the task.

    Yet someone who is CEO of a more successful company is going to be talked into taking this job via acquisition, i.e. they will buy Yahoo! and run it, thus taking on the "daunting task" that will take a fair amount of time to perform... all the while acting as a distraction to the successful business they have now.

    I can believe that someone would do this if they thought they were paying a price that amounted to stealing Yahoo!, but not at a price that "unlocks value" for the current shareholders. The current investors have to face reality: they are holding a turkey, and they are going to take a big haircut on their shares.
    Robert Hahn
  • RE: Yahoo doesn't need new CEO, it needs to sell, say analysts

    So basically it the same solution Wall Street applies to a company which faces problems sell up to a rival company or asset strip the company for all it is worth. This is why tech companies founders should try and maintain majority voting rights, like Google has and News corp, where the power with in those companies lay with the founders and no one bosses them around, not even Wall Street. <br><br>Yahoo is still descent company with a billion dollar a year profit. They need to hire someone with some vision to lead the company. Someone who can stir up a bit of media interest and who gets the company in the news for reasons other than closing down/selling off a service, sacking staff, sacking a other CEO, rehiring another CEO, or trouble with one part or another of Yahoo empire. Someone lives an breaths technology and equally the media side of the business. An run the company as a Technology and media business, as Google, Apple and Facebook all do successfully.<br><br>They need to start to generate some positive buzz around the company, I have not got a clue how to do that but they need to find a way.
    Knowles2
  • RE: Yahoo doesn't need new CEO, it needs to sell, say analysts

    That microsoft buyout deal looks better a few years later dont it?
    notrozer
  • RE: Yahoo doesn't need new CEO, it needs to sell, say analysts

    Yahoo may well be a company whose time has come -- and gone.
    John Ellingson
  • Poor Yahoo!

    Wow, I lost my Internet virginity back in the mid-90s when I was doing undergrad CompSci, and Yahoo & Netscape were my portals to this new digital world. Unfortunately, I have long since left Yahoo for Google (GMail, Search, etc.). However, I still have a special place in my heart for Yahoo. Hope they can turn things around. :-(
    maxtheitpro
  • RE: Yahoo doesn't need new CEO, it needs to sell, say analysts

    When AT&T first became involved in the high speed dsl business, about 10 yrs. ago, my first thoughts were "Why in the hell did they choose Yahoo as a partner? Why not Microsoft?" 95% of the spam I have received since then has came from Yahoo's advertising partners. Need I say more?
    emailads=spam
    • RE: Yahoo doesn't need new CEO, it needs to sell, say analysts

      @emailads=spam
      Yes and we get only troubles with their emails servers and services.... That why I push aways every body from ATT/Yahoo. Beside I still think Yahoo is an irresponsible company in China.
      thegreenwizard1
  • RE: Yahoo doesn't need new CEO, it needs to sell, say analysts

    I use Yahoo! as my default emailing account, that was what first brought me into the digital world of emails and never found a reason to change to another one.

    Almost switched to hotmail but didn't see the need to take on the challenge of informing several companies that it had changed.

    I guess that's a goodbye to my Yahoo! accounts? Cause that is the only reason I'll switch my default email to hotmail (NEVER GMail) :p
    MrElectrifyer