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