Yahoo Could Take Years to Recover, Says CEO Bartz

Yahoo could emulate Apple in the 1990s in taking years to restore itself to competitive health, CEO Carol Bartz told reporters during a March 2 event to commemorate Yahoo's 15th anniversary. Although Yahoo has aggressively sought to expand its more popular features while cutting underperforming applications and programs, the company has seen its U.S. search-engine market share decline in recent months. A 10-year agreement with Microsoft will see Bing power Yahoo's back-end search, allowing Yahoo to focus primarily on designing its offerings in ways that appeal to a broad number of users.

Yahoo could take years to return to strength, according to CEO Carol Bartz, who compared her struggling Internet company to Apple circa the return of Steve Jobs as CEO in 1997.

"It took him four years," Bartz told the Associated Press and other media during a March 2 meeting to commemorate Yahoo's 15th anniversary, referring to the length of time Jobs needed to return Apple to relative health. "I know people want to see magic things happen. ... The magic things happening are deep inside our little system here."

Bartz herself has a four-year contract with Yahoo, due to expire in 2013.

Yahoo has been attempting to assert its continued viability as a Web portal, despite declining U.S. market share in search and a deal with Microsoft that will see Bing become the back-end search engine for all Yahoo sites. Under the terms of that 10-year agreement, Yahoo will take over worldwide sales duties for both companies' search advertisers, and Microsoft reportedly will pay Yahoo some $150 million in expenses as a deal-closing sweetener.

During an Aug. 24, 2009, press conference, Yahoo executives insisted that they would retain users by adding additional features to core properties such as Yahoo Messenger, Yahoo Mail, Yahoo Search and others. By integrating YouTube, Facebook, LinkedIn and other sites into its front-end search results, Yahoo hopes to keep users on its sites longer and thus attract advertising dollars.

"Background search is much like an Intel chip," Bartz told the media Sept. 22, when she headlined a high-profile event at NASDAQ MarketSite in Times Square to mark the launch of Yahoo's $100 million branding campaign. "Thank God they've done their R&D and gotten it out into the world; but the experience that Dell wraps around their chips, and HP wraps around those chips, is different."

Bartz also insisted: "We will continue to drive relevance; search is incredibly important to us and our advertisers. We need to provide a great experience, even if the plumbing's down here."

In addition, Bartz has taken to eliminating any underperforming units within the company, including GeoCities, a free Web-hosting service that had steadily lost ground to newer offerings in the decade following its $3.6 billion acquisition by Yahoo. Since the beginning of 2009, Yahoo announced that it would cut around 5 percent of its then-workforce of 13,600 employees.

Despite the push of its latest marketing campaign, however, Yahoo has seen its U.S. search market share incrementally decline in the face of fierce competition from both Google and Microsoft. In January, Yahoo occupied 17 percent of that market, down from 17.3 percent in December 2009, while Google claimed 65.4 percent and Microsoft owned 11.3 percent.

"Investors hoping that tonight's data would show stabilization for Yahoo will be disappointed," BroadPoint AmTech analyst Ben Schachter wrote at the time. "Overall, the trends continue to be very strong for Bing, and remain very bad for Yahoo."