Yahoo's Bartz era: The non-stop drama in her own words

Why did Carol Bartz have to go? She tells the tale in her own words during investor calls.
Written by Larry Dignan, Contributor

Carol Bartz joined Yahoo as CEO with high hopes, a few F-bombs and a no-nonsense style. But Bartz was ultimately sunk by a drama-go-round that never ended. Yahoo never quite got its act together even though Bartz made some solid moves to set the company on better footing.

In the end, Bartz just never had those quarters where Yahoo beat estimates and raised its outlook. As a result, she was ousted via phone. Her farewell memo was sent from her iPad.

To all,

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.


Sent from my iPad

Yahoo followed up with an official statement. The company named CFO Tim Morse as interim CEO and Yahoo said it will look for a new leader---again. Roy Bostock, chairman of the Yahoo board said, the company "sees enormous growth opportunities on which Yahoo can capitalize."

Funny that's what Bartz said back in 2009. What went wrong? We'll let Bartz tell the tale. Let's roll the earnings call quotes following more than a few spotty quarters.

Also: Bartz out, CNET: Blown Microsoft sale, Bartz gone, Time to sell? CBS News: Yahoos in charge, Techmeme

July 19, 2011: Sales turnover kills quarter

Bartz's had the wind at her back---just no sales team. She said:

Let me be clear what this was not. This miss was not about new competitive developments. It was not about the economy, although the economy didn't help as we saw softness in the CBG, auto and retail categories. Finally, it was not about engagement which grew nicely in Q2 as you can see from the engagement metrics on our IR site. Rather, the root cause is the comprehensive changes we discussed with you at our Investor Day, changes to our US sales leadership which led to changes to our sales org structure and then to changes in our sales force.

In May we made a decision to reorganize the US field organization into -- and to move aggressively to position ourselves for more rapid Display growth in the future. However, the combined short-term result was significant turnover in our field sales ranks that is the actual feet on the street. Turnover accelerated as all of these changes affected the sales organization. As with any reorg, we initiated some of the departures and some people chose to leave on their own.

Frankly, however, we underestimated how much the changes would increase turnover; enhance our ability to close premium class-1 sales in the back half of Q2. That in a nutshell is what happened and what drove it.

The second quarter woes appeared after an upbeat investor day in June.

May 25, 2011: Alibaba flap emerges

Bartz said:

The core strategy of investing in the Alibaba Group has clearly been the right way to participate in the China market. That's not to say that any business relationship, there aren't bumps in the road and there certainly is a country risk associated in doing business with China. But overall, the strategy is the right one and one we believe has generated a great benefit to Yahoo! shareholders.

Now, where we are in Alipay, we're engaging with Softbank and Alibaba constructively. We believe we're making significant progress. We're focused on two agreed-upon principles, one, ensuring the inter-company relationship between Alipay and Taobao is structured to preserve the value within Taobao and, by extension, within the Alibaba Group and, two, ensure that Alibaba Group is appropriately compensated for the value of Alipay.

The Alibaba fiasco was settled in July.

April 19, 2011: Microsoft revenue per search off

Bartz said the Microsoft search pact was work in progress.

The good news is that many of our most important advertisers are realizing much higher ROI on their campaigns in the combined marketplace. We've seen major financial, auto, retail and customers spending multiples of what they spent with Yahoo! and Microsoft previously because returns have been great.

And some recent third-party reports have reinforced why we did the Alliance in the first place. Advertisers' CPA and ROI on Yahoo! has improved dramatically. This is good news for advertisers as they seek an alternative for their online search marketing spend.

On the downside, however, adCenter isn't yet producing the RPS we hoped for and are confident is possible. Advertisers are seeing strong ROI, but technical limitations in the current adCenter platform mean the click volume just isn't there yet.

We had expected RPS to be neutral by midyear. It is now evident that it will take Microsoft longer to achieve that goal. We expect that to happen by year end. In the meantime, the RPS guarantee helps protect our revenue. And our view of the long-term potential of the marketplace remains unchanged.

We're working very close with Microsoft on this. They understand the issues, and they are hard at work on systems architecture, science models, and better features and functions in adCenter. They have an aggressive roadmap to bring those to the marketplace.

As Microsoft focuses on RPS improvement in the US, we're holding off on transitioning more paid search markets this year. We will transition the remaining paid search markets once we believe the changes are in place to yield the right results for our advertisers.

Jan. 25, 2011: Things are looking up---for 2012

Bartz said:

2011 will be the final year of major competitive revenue headwinds, including divested business lines, outsourcing and, of course, our rev-share with Microsoft. So to say it another way, 2012 will have cleaner apples-to-apples comparisons. We also believe the investments we're making in new technologies and products for users and advertisers will add to our growth.

But turnover appeared as an issue again.

We've made some great new hires, attracting some really exceptional talent to the leadership ranks of Yahoo!. We've got Ross Levinsohn running the Americas region; Wayne Powers running US sales; Randy Roumillat as our new CIO; and Mickie Rosen leading our media network, just to name a few. With these new people will come some changes as they reorganize and build out their team.

Just as we made some changes in our product org last month, today we're making modest changes to the other organizations within Yahoo!, reducing about 1% of the jobs at the Company.

Oct. 19, 2010: Bartz upbeat and touts solid progress, but turnover issue looms

Bartz habitually touted her operational moves. She said:

When I first arrived here almost 21 months ago, we stepped back and took a good look at the Company, to deliver higher profitability, and stronger growth we realized we had to make a series of substantial changes. We had to reorganize the Company to break down silos so we could move faster, eliminate redundancies, and improve our cost structure. We had to organize and make better use of the incredible amounts of data we collect to improve the user and advertiser experience. We had to answer the big questions about how best to compete in search, which at the time was another declining trend for the Company. And we needed to create fundamentally better platforms and infrastructure across the Company, so we could move more quickly to deliver the kind of quality content and experiences our users and advertisers deserved.

Since then, we've been working hard to create a stronger, more disciplined and focused Company. This also includes making our organization more efficient, more lean, and more nimble. One byproduct of any change is always movement of people. Some people leave, some get promoted, and some good new people arrive. The most important thing is making sure the right person is in the right job at the right time.

July 20, 2010: Content bets emerge

Bartz talked up Associated Content. Remember them?

So let me talk a bit about what we're doing to drive engagements. On the content side, having great content that's real time, interesting, and entertaining is one thing, but that's not enough to ensure engagement. Users today want to go beyond words presented on the screen. They want video, they want to interact, they want a social aspect. They want it anywhere, any time on any device and they want it very personally relevant and local. These are the four O's I talked about at investor day--Video, social, mobile, and local. The big content move we made in Q2 was our acquisition of Associated Content. Their crowd source approach with 380,000 contributors rounds out our content strategy. We now have an incredible resource to tap that extends our ability to provide high-quality, personally-relevant content to our users and advertisers.

April 20, 2010: Search work ahead

Bartz sets up for the search slog:

I don't think it's any secret that for the past 18 to 24 months we had a tough road to hoe in search. And there was definitely a sugar low after we announced the Microsoft search alliance last year. We had a lot of work to do internally to get ready for it. And we weren't aggressive enough on volume even though we were focusing on improving RPF. But all of that is past now. We believe search share has bottomed, and will trend up in the second quarter thanks to our work to grow volume. A key part of these efforts, has been using the power of the Yahoo! network, not just externally but internally as well. Our teams are now integrated and aligned around our goal and I can tell you that in addition to display, there is a renewed energy among Yahoo! around search. We are really excited about our product plans.

And that also includes work to improve relevance in ROI for advertisers, that will continue until the transition to Microsoft is complete. Speaking of Microsoft, we are deep into detailed planning to ensure we transition users, advertisers and publishers with quality. Our aim is the high quality transition starting with the US, prior to the 2010 holiday season. Both companies are very engaged in this process, and there is a lot of work to do. Remember, it's all about providing the best product to users, advertisers, and publishers. And we will only begin the transition when we are absolutely ready.

Jan. 26, 2010: Tough year concluded

Bartz reflects:

I recently celebrated my one-year anniversary with the Company, and what a ride it's been. In fact I might say I made it through my first year with the Company, and it was a wonderful ride. Very bumpy, and frankly like many other business leaders, I'm very, very glad it's over. But it was also a great opportunity to restructure, reset and position Yahoo for the next era of growth.

We reset the management team and reorganized the Company. We launched the new home page and a suite of great mobile products and apps. We refreshed mail and messenger and some of our other key properties. We introduced new ad products and upgraded existing platforms to drive improved advertiser ROI. And I'll talk more about that in a minute. And, of course, we signed the search agreement with Microsoft. We did all of this during one of the worst economic climates ever. Most of the S&P 500 suffered with declining revenue last year, and that includes many of our largest customers. In that light, Yahoo's revenue decline of only 10% is pretty darn good. Compare that with traditional media who are really struggling, and we all hold up well.

July 29, 2009: Yahoo, Microsoft ink search pact

Microsoft's search deal was game changer deal, Bartz said:

This is a great day for Yahoo!. The agreement between Microsoft and Yahoo! is a game changer and I'm glad to finally be able to talk with you about it...

Yahoo! is a great business; you all know that half the Internet users come to us on a daily basis. But we face a formidable competitor in one aspect and that aspect is search. It became obvious to us that working with another great technology company would help us share the investment expense to scale the market. This deal enables us to keep a healthy revenue stream and invest in areas critical to our future while Microsoft invests in search technology.

We want to invest in what is really important to our future success including winning audience properties, display advertising capabilities and mobile experiences. Through this agreement Microsoft will provide the search technology that will enable us to innovate for an even better user experience for all those who come to Yahoo!. Our vision is to be the center of people's lives online and we must deliver on our vision to be the best possible, whether through popular products and technology like our new home page or by working with other innovators like Microsoft.

April 21, 2009: Bartz at the three month mark

Bartz talked of her learning curve:

What an amazing busy three months it has been since I joined Yahoo. I have learned a tremendous amount from our customers, partners, shareholders, and most importantly from Yahoo's senior leadership and employees.

Starting with what I have been up to. I hit the ground running in January, beginning with deep dives with our strategy and product teams on everything from our user products and advertising services, to our internal structure and systems. I have also met with several very impressing individuals and teams including our industry leading sales forces in the US and Europe, the exceptional talent in our engineering groups and research labs, and many of our existing and potential customers and partners. All of these conversations have been a great introduction for me, and even provided some eye-opening experiences for those who have been here for a while. The most important take away from these conversations was the importance of having a wow experience for all of our users around the world.

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