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Yahoo, a Web services pioneer that has been beset with financial troubles for the better part of the last decade, made a change in leadership Sept. 6 when its board of directors removed CEO Carol Bartz and named Chief Financial Officer Tim Morse as interim CEO.
It was the second announcement of a change at the CEO position at a major IT company in the last two weeks. Apple co-founder and CEO Steve Jobs announced his departure on Aug. 24.
It was the third major news story in a month involving upheaval at long-established IT-leading companies. Hewlett-Packard on Aug. 18 revealed strategic changes in direction by dropping its personal computing and webOS hardware businesses and acquiring enterprise software provider Autonomy for $11 billion.
The Bartz news, broken by Kara Swisher at AllThingsD, probably was not a surprise to many IT industry observers, although Bartz (pictured) had only been in the position for about two-and-a-half years. It was well-known inside and outside of Yahoo that Bartz had had a rocky time as the head of the flailing Internet company that has been overtaken in many markets by Google.
Bartz, who came from Autodesk to take over the Yahoo CEO job from co-founder Jerry Yang in January 2009, wrote the following cryptic message to Yahoo employees:
“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.Carol“
The phone call came from Yahoo board Chairman Roy Bostock, who was one of Bartz’s most influential backers when she won the job in January 2009.
Numbers Tell the Story
This financial chart, ironically carried in Yahoo’s own financial section, tells the corporate story quite candidly.
“It [Bartz’s departure] seems a bit premature sitting from this perspective,” Enterprise Strategy Group Vice President Brian Babineau told eWEEK. “It wasn’t like she was handed a rocket ship of a business. Obama may have had a better situation entering the White House than she did at Yahoo.”
Yahoo’s performance in the last six months has shown a “massive separation in value” between Google and Yahoo on a relative basis, Babineau said.
“It’s a sad situation for a company that seemed to have the resolve to reinvent itself. All the initial reports look like this was done very swiftly,” Babineau said. “But what a ride from the Microsoft buyout option to now.”
Babineau was referring to 2008, when Microsoft was reported to have put a offer worth $47 billion on the table to acquire the company. Shareholders were deeply divided on the offer, but the Jerry Yang-led opponents to the acquisition won out.
The pro-acquisition advocates, led by high-rolling professional investor Carl Icahn and trust fund manager Eric Jackson, eventually sold off their shares.
Microsoft CEO Steve Ballmer later indicated that his company would probably make another run at buying Yahoo a year later, but it never did.
“Clearly Yahoo was falling further behind the more aggressive Google,” analyst Zeus Kerravala of the Yankee Group told eWEEK. “Yahoo has tremendous assets and needs a faster-acting CEO to take a bite out of Google.”
Employees Had Their Opinions
Yahoo employees had their own opinions about the job Bartz was doing. According to hundreds of their reviews and ratings on Glassdoor, a jobs and career community, Yahoo employees have given Bartz a cumulative 54 percent approval rating since 2009. Her approval rating had been on the decline; this past quarter she held a 33 percent approval rating.
Glassdoor also reported that when former CEO Yang left office in 2008, he held a 43 percent approval rating among employees; the average approval rating for CEOs on Glassdoor is 62 percent.
In another development that may or may not be connected to Bartz’s departure, Yahoo Vice President of Product Development Bobby Figueroa also was reported to be leaving the company. Figueroa was responsible for the operation of most of Yahoo’s advertising infrastructure.