September 7, 2011
Yahoo Fires CEO Bartz, What Next For The Company?
The news came in late yesterday that the Yahoo Board of Directors fired CEO Carol Bartz even though she had about a year to go on her contract. There are various angles to the story. One is the way Bartz was informed of the decision. Board Chairman Ray Bostock called her up an told her. One of the jokes making the rounds of the Net is he would have used Yahoo Messenger but it wasn’t installed. These less than humorous digs suggest a view that Yahoo is becoming less and less relevant as time goes on. The BBC, for example, calls the company under Bartz’s tenure as one of “managed decline.”
That same report cites the Yahoo press release on the move, quoting Bostock as saying:
The Board sees enormous growth opportunities on which Yahoo! can capitalize, and our primary objective is to leverage the Company's leadership and current business assets and platforms to execute against these opportunities. We have talented teams and tremendous resources behind them and intend to return the Company to a path of robust growth and industry-leading innovation. We are committed to exploring and evaluating possibilities and opportunities that will put Yahoo! on a trajectory for growth and innovation and deliver value to shareholders.
Analysts disagree with the happy talk about the future of Yahoo. Forbes was quick to compare the options and suggested that the greater value for the stockholder would be for the company to sell off parts of itself. One of these suggested option was to combine itself with AOL. The latter would be particularly ironic as AOL was once an Internet powerhouse that has now shrunk to, what, the Huffington Post? Even that combination was a step up for AOL.
Yahoo is often described as one of the most visited web sites in the world. That may be true, but it doesn’t seem to know how to make money from those visits or even keep those visitors on the site for more ad views. Even though the company makes money, it makes less and less every year since it rejected the Microsoft buyout offer made in 2008 for $33 a share. Yahoo stock price now hovers between $13 and $14, having a slight bump up over the news of Bartz’s departure.
Yahoo’s problems are more than being eclipsed by Google in search and the dollars search ads bring in. There have been identity issues in that the company seemed to have uncertain direction as to whether it was a search company or a content company. That started back in the days when Terry Semel, a former Warner Brothers executive, headed the company. Semel firmly planted Yahoo as a content provider but could never gain the kind of traction that Google achieved with visitors.
Google came across as more dynamic and forward looking. It created its own mail system, Gmail, bought YouTube, created Google Docs, disrupted Apple’s path to phone industry dominance by creating Android, built its own web browser, Chrome, bought companies to add features, and wasn’t afraid to cut its losses when some of those investments panned out. Now there is talk that Google is aggressively seeking to purchase Hulu as a way of promoting Google TV.
Google took chances (see the Google book scanning project) while Yahoo plodded along. Search at Yahoo was outsourced to Microsoft. The company closed its Geocities service. There is hardly any news about Yahoo that identifies it as a progressive company striving to compete in multiple business lines. The removal of Bartz is probably the most striking news to come from the company in quite some time.
Google, Microsoft, Facebook, and Apple, all natural competitors, appear in way more headlines for good or ill. Yahoo either doesn’t want to make waves or doesn’t know how to in the current Internet and tech landscape. It’s sad that it’s come to this, from the days when Yahoo had the premier hand-curated web directory. I understand that there are individuals out there that will swear that they use Yahoo every day. The company’s lament is that there aren’t enough of them that embrace the full range of Yahoo services, whatever they are. “Whatever they are” is a definite part of Yahoo’s ongoing problem. Get a vision and act on it instead of talking about "enormous growth opportunities," or become the next AOL or MySpace.
Late Afternoon Update: The Guardian UK is reporting that Yahoo is going to put the company up for sale. [MG]