Yahoo fires Bartz from CEO post

Chief financial officer Tim Morse has become interim chief executive, following Carol Bartz's departure after two-and-a-half years heading up the struggling digital media company
Written by David Meyer, Contributor

Yahoo is once again on the hunt for a new chief executive, after the company's board sacked Carol Bartz on Tuesday.

Carol Bartz, ex-Yahoo CEO

Yahoo has fired Carol Bartz (pictured here in February) as chief executive of the company after two-and-a-half years in the job. Photo credit: Stephen Shankland/CNET News

Bartz was in the role for two-and-a-half years, which is a year more than her predecessor, Yahoo co-founder Jerry Yang, held the reins. She had 15 months left on her contract. In a statement on Tuesday, the company said chief financial officer Tim Morse will take over as interim chief executive.

"On behalf of the entire board, I want to thank Carol for her service to Yahoo during a critical time of transition in the company's history, and against a very challenging macro-economic backdrop," chairman of the board Roy Bostock said in the statement. "I would also like to express the board's appreciation to Tim and thank him for accepting this important role."

For her part, Bartz sent an email to all Yahoo staff from her iPad, reading: "I am very sad to tell you that I've just been fired over the phone by Yahoo's chairman of the board. It has been my pleasure to work with all of you, and I wish you only the best going forward."

Bartz's tenure

Bartz, former chief executive of Autodesk and a veteran of Sun, DEC and 3M, took over at Yahoo in January 2009. At the time, Bostock said Bartz was "exactly what Yahoo needs to get back on a path toward achieving its full potential".

I am very sad to tell you that I've just been fired over the phone by Yahoo's chairman of the board.
– Carol Bartz's email to Yahoo employees

Her tenure saw Yahoo cease to be a search technology operation — Tuesday's statement described Yahoo as "the premier digital media company" — after it signed a deal with Microsoft in mid-2009. Under the agreement, Microsoft began providing search capabilities for Yahoo through Bing, while Yahoo handled search advertising for both partners via its Panama platform.

However, the arrangement did not turn Yahoo's fortunes around, and the company announced hundreds of layoffs at the end of 2010. In July, Bartz admitted that a reorganisation of sales staff had gone wrong, causing understaffing that hit Yahoo's quarterly revenues. The company saw a five-percent drop in revenue excluding traffic acquisition costs in the second quarter of 2011, though its operating income rose nine percent year-over-year.

Bartz also suggested in July that Yahoo was struggling with the "technology limitations" in Microsoft's adCenter online advertising delivery system.

In December 2010, Yahoo shut down a range of smaller services, including AllTheWeb.com, Yahoo Buzz, Yahoo Picks and Delicious, although Delicious was subsequently rescued by YouTube's founders. Its focus on search advertising as a primary revenue generator did not greatly pay off — according to Hitwise, Yahoo handled just three percent of UK search requests in July.

The big picture

Gartner analyst Allen Weiner said Bartz's exit had long been rumoured, but it was surprising that it took place shortly before the fourth quarter, which is generally strong for Yahoo.

"Neither the micro nor macro view of Yahoo's performance since Bartz took over in January 2009 paints a pretty picture," Weiner said in a blog post on Tuesday. "The big picture shows that the Microsoft-Yahoo search alliance has not gone to either party's satisfaction, and that Yahoo has lost a number of key executives and was caught so short staffed [it] pointed to being undermanned as a reason for a disappointing Q2."

Weiner suggested Bartz "had neither media nor web technology chops". In addition, he noted new projects such as Connected TV and Livestand have been progressing "at a snail's pace" and described Yahoo's social-media strategy as "a work in progress at best".

"The conundrum for Yahoo in recent years has been its inability to develop an identity and sell that to employees, advertisers, partners and consumers," he added.

Overall, Yahoo needs to find a leader who can frame its various successful services — particularly in instant messaging, sports, news and finance — into a "cogent opportunity that would lead a transformation resulting in a 21st-century media-technology power", Weiner concluded.

Strategic review

Temporary chief executive Morse, who takes charge effective immediately, will continue as chief financial officer. He has also been appointed to a new 'Executive Leadership Council' that will support him in "managing the company's day-to-day operations until a permanent chief executive is appointed, as well as supporting a comprehensive strategic review that the board has initiated to position the company for future growth", Yahoo said.

The conundrum for Yahoo in recent years has been its inability to develop an identity and sell that to employees, advertisers, partners and consumers.
– Allen Weiner, Gartner

The Executive Leadership Council consists of a panoply of Yahoo vice presidents. It does not include co-founders and 'chief Yahoos' Yang and David Filo, who will nonetheless "provide counsel to Tim and the Executive Leadership Council", the company said.

"It is an honour to be selected for this role and lead the company with this world-class team of executives. I look forward to working with the Executive Leadership Council and the talented employees of Yahoo, and to partnering with the board to invest in the organisation and continue to drive its ongoing growth plans," Morse said in the statement.

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