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For the third time in four years, Yahoo (NASDAQ:YHOO) has bid goodbye to a CEO, leaving the company reeling after two-plus years of relative inertia in the ultra-competitive Internet sector.
Yahoo Sept. 6 fired CEO Carol Bartz, who was expected to bring a lot of the fire and chutzpah she showed for years as CEO at software maker AutoDesk, and named CFO Tim Morse her successor.
Wall Street cheered the move as Yahoo’s stock price, which hovered around $12.50 before and since Bartz took over, shot up to $13.72 Sept. 6 before settling down to $13.42 on the morning of Sept. 7 on the news.
Morse follows Bartz, who succeeded co-founder Jerry Yang in January 2009, who in turn took over for Terry Semel in June 2007. Bartz, Yang and Semel all failed to restore Yahoo’s flagging brand after Google (NASDAQ:GOOG) soared past the company in search and passed it for the first time in display advertising earlier this year.
Facebook, Twitter and other social media players also whittle eyeballs from Yahoo, which is still the No. 2 search player and whose Yahoo Mail product is the world’s leading Webmail application.
Bartz said in an email to Yahoo employees she was fired via phone by Yahoo Board Chairman Roy Bostock, who has also weathered heavy criticism in the last several years for supporting Yang and then Bartz even as investors called for their firings.
Bartz made some interesting moves, overseeing a search and mail revamp and integrating tightly with Facebook and Twitter in its search, news and mail properties.
However, the sometimes tart-tongued Bartz may best be remembered for putting together a bold search deal with Microsoft, which pays Yahoo 88 percent of traffic acquisitions costs through the first five years of a 10-year deal where Bing powers Yahoo search. Bartz earlier this year Yahoo’s search deal with Microsoft wasn’t producing as much revenue as the companies expected.
Yahoo, which triggered several rounds of layoffs, closed Buzz and GeoCities and sold its valuable Delicious bookmarking asset under Bartz, also watched Alibaba had spun off an online payment service, a play that could impinge the value of Yahoo’s investment in the portal.
Yahoo Looks for a New CEO
“Yahoo still calls itself a media-technology company but has a leader at the helm that had neither media nor Web technology chops,” Gartner analyst Allen Weiner said in a research note. “At the micro level, many of the company’s headline projects such as Connected TV and Livestand seem to be moving at a snail’s pace and its social media strategy is and has been a work in progress at best.”
Employees are certainly in favor of the change, according to this assembly of quotes from various Yahoos by Glassdoor, which said Bartz’s approval rating fell to 33 percent this past quarter.
“Lack of numbers drive decision-making, lack of customer focus. Top leadership denies the world changed so we are still pursuing the portal business when the world rapidly changes to mobile, apps, social networks and location-based personal solutions,” according to one Yahoo product manager.
The next order of business is finding a successor to Morse, whom Global Equities Research analyst Trip Chowdry criticized in a research note:
“He just kept cutting costs which is the easiest thing to do. Both the CEO (Bartz) and CFO (Morse) are completely clueless of the velocity of innovation that is needed to succeed in the Internet space. Both the CEO and CFO lacked the ability to think big, bold and execute fast…their time horizon has been years, while it should have been days not years.”
GigaOm founder Om Malik summed up what he believes Yahoo needs, thusly: “What Yahoo needs is a product-oriented chief executive who has cut her/his teeth on the consumer Internet and has a clear idea of what the company’s product lineup looks like in an Internet that is primarily mobile. And more importantly, that person has to be steely enough to give up on the products of the past and betting on some key products for the future.”
AllThingsDigital’s Kara Swisher, who broke the news of Bartz’s firing late Sept. 6, compiled this list of possible replacements, which includes formers News Corp. executive Peter Chernin, Facebook COO Sheryl Sandberg, Hulu CEO James Kilar and many more industry veterans with Internet company experience.
Bartz is the third CEO in the last five months to depart from a major Silicon Valley high-tech company. She follows Google’s Eric Schmidt, who became executive chairman as co-founder Larry Page, and Apple’s Steve Jobs, who resigned due to illness.