Yahoo Stock rises on buyout Rumors

cNet

 

Make no mistake, there are no definitive offers on the table to do a variety of takeover deals of Yahoo by either private equity moneybags or from big media giants such as News Corp. and smaller Web firms such as AOL.

But that does not mean that major players are not circling Yahoo and assessing the situation aggressively, a fact reflected in the rise in the Internet giant's stock price today based on the many rumors swirling around it.

Despite being news to some, BoomTown had previously written about all these various scenarios, including interest from News Corp. and AOL, after the recent departure of a trio of top Yahoo media and sales execs brought into sharp relief the pressure CEO Carol Bartz is under to turn around the company.

Yahoo shares were up almost 6 percent to close at $15.25, a high of late. They're up to $16.20 in after-hours trading.

According to sources close to the situation, that's because big PE firms such as Silver Lake Partners, as well as News Corp., AOL, and others, all have their PowerPoints opened up to try to figure out if there is a deal to be made to buy all or a piece of Yahoo in the wake of corporate turmoil, slow revenue growth, and a weak stock under the leadership of Bartz.

Sources said the key players in the growing soap opera are the execs who run Yahoo-affiliated companies in Japan and China. That would be Masayoshi Son of Yahoo Japan and Jack Ma of the Alibaba Group.

Yahoo owns big and lucrative stakes in both companies, assets which make up a big part of the company's current valuation.

The sale of those stakes is what has some investors interested, since--if thorny tax issues can be solved--it would make the purchase of part or all of Yahoo very inexpensive in relative terms.

Sources added that any approach would have to be nonhostile, since Yahoo still has some stringent antitakeover provisions in place from a takeover attempt a few years ago by Microsoft.

But alternate CEOs to Bartz are part of the ruminations:

As I wrote two weeks ago, which others are finally getting around to checking out (took you long enough!):

    Most frequently mentioned by big investors in Yahoo: AOL and its CEO Tim Armstrong.

    Armstrong, said sources, has not shied away from the idea of Yahoo acquiring AOL and installing him as CEO with Bartz as chairman. AOL's valuation is just $2.65 billion.

    Although AOL has also been trying to turn itself around and is in a much less powerful position than Yahoo, Wall Street likes Armstrong's story for AOL as a modern-day media and media distribution company.

    "At least he has a narrative that is believable," said one big investor in both companies. "Bartz has no vision."

Among the other credible candidates most mentioned: News Corp. digital head Jon Miller, if the media giant was part of any deal; and Juniper Networks CEO Kevin Johnson, who was the architect of the failed takeover of Yahoo by Microsoft.

What's interesting here is what the board--and, most specifically, co-founder and former CEO Jerry Yang--is doing now.

For certain, it is receiving an incoming flood of negative communications from big shareholders, most of whom are unhappy with Bartz's management. One big investor recently told board members that their continued inaction in the face of all the trouble was unsettling.

One big event coming up is the third-quarter earnings report by Yahoo on Tuesday, after the markets close.

If Yahoo's sales remain flat as they were in the second quarter, even with improved earnings, there will be even more scrutiny of Bartz to find growth.

One way might be via a big acquisition. Yahoo has recently been contemplating the local space, especially social discounting phenom Groupon. But the price would have to be high, sources said--well above $2 billion in cash and stock.

Would such a bold move be enough to keep the predators of Yahoo at bay? We'll see, as the purple world turns.

A Yahoo PR person declined to comment on the stock rise.

Of course, a higher stock is a problem for acquirers, as it makes Yahoo more expensive. Still, sources said a Yahoo deal of about $20 a share is entirely "doable."

Investment Vultures increase Pressure on Yahoo CEO

Associated Press

 

With buyout vultures circling the Internet company, Yahoo Inc. CEO Carol Bartz may have to accelerate her timetable for engineering a turnaround if she wants to save her job.

Bartz has said it could take a couple more years to revive Yahoo after a long period of listlessness, but it appears the company could become a takeover target if its financial performance doesn't improve within the next few months.

That urgency was underscored late Wednesday as The Wall Street Journal reported that another falling Internet icon, AOL Inc., is in preliminary discussions with a group of leveraged buyout firms, including Silver Lake Partners and Blackstone Group LP, about making a joint bid for Yahoo because its stock has been slumping for so long. The Journal story cited unnamed people familiar with the talks and said two or three other firms could also be interested in the deal, which could bring AOL's charismatic CEO, Tim Armstrong, to Yahoo.

It's likely an opportunistic suitor would emerge if Yahoo's revenue keeps growing at a turtle's pace while rivals such as Google Inc. and Facebook sprint further ahead as advertisers shift more of their spending to the Internet.

Although Yahoo's market value has fallen dramatically in the past few years, buying the company would still be expensive and quite complicated. That's the main reason most analysts believe it would take a while to put together a deal, even if Yahoo disappoints investors yet again next Tuesday when it reports its third-quarter earnings.

With no bid on the immediate horizon, Yahoo shares cooled from the heated reaction to the Journal's initial report. The stock rose 68 cents, or 4.5 percent, to $15.93 on Thursday. It had soared by nearly 13 percent in extended trading Wednesday following the Journal's report.

Yahoo hired Bartz, a tough-talking Silicon Valley veteran, in January 2009, convinced that she would prove the company is worth more than the $47.5 billion that Microsoft Corp. was offering to take over the company, a bid that Yahoo snubbed in May 2008. Microsoft has since forged an Internet search partnership with Yahoo in a joint challenge to Google's dominance of the Web's most lucrative ad market.

Although Bartz has won praise for negotiating the Microsoft alliance and cutting costs to boost Yahoo's profits, the company's revenue through the first half of the year edged up by less than 2 percent. By comparison, Google's rose 23 percent during the same period. That letdown has left Yahoo's stock far below Microsoft's final offer of $33 per share, turning that bid into a millstone.

"Given everything that Yahoo shareholders have been through since then, there is a limited amount of patience left," said Ryan Jacob, portfolio manager of the Jacob Internet Fund, which owns more than 100,000 shares. "It's not necessarily Bartz's fault, but she had to know what she was getting into coming in."

The recent defections of several top Yahoo executives have stirred speculation that Bartz is wearing out her welcome as she approaches the midway point of her four-year contract.

If that's true, it could open the door for Armstrong, 39, who could be seen as a more media-friendly, suave leader than the sometimes-cranky, profanity-spewing Bartz, 62. What's more, Armstrong's Internet background could be seen as a better fit, given that he built up Google's highly prosperous North American advertising business before leaving to become AOL's CEO last year. Bartz is more of a technologist, having previously been CEO of software maker Autodesk Inc. and a top executive at Sun Microsystems Inc.

But Armstrong's reign at AOL so far has largely mirrored Bartz's time at Yahoo. Like his counterpart, Armstrong has spent much of his time weeding out the company's unprofitable operations while focusing on bringing in more unique content in an effort to lure more Web surfers and bring in more advertisers.

Those changes haven't been enough to lift AOL's yet, making it look like a "mini-Yahoo," Jacob said.

AOL's market value is just $2.7 billion, about 13 percent of Yahoo's $21.5 billion. That gap means AOL would need plenty of help to buy Yahoo.

Yahoo declined a request to interview Bartz Thursday. The company, which is based in Sunnyvale, Calif., also declined to comment on the reports of a possible takeover bid. The Journal said Yahoo hasn't been involved in the talks yet.

But the board appears to be taking the talk seriously enough to have hired Goldman Sachs Group Inc. to advise directors on a possible defense, according to Bloomberg News, which also cited unnamed people. Goldman Sachs declined to comment.

AOL and Blackstone also declined to comment Thursday. Silver Lake didn't return calls.

Despite Yahoo's struggles, there are several reasons why the company remains a takeover target.

For starters, Yahoo still boasts one of the world's best-known brands. Its website remains alluring enough to attract an audience of nearly 600 million, although people have been spending less time there as they hang out more frequently at trendier spots such as Facebook.

Yahoo also owns a 39 percent stake in one of China's fastest growing companies, the Alibaba Group. That stake presumably would be sold if leveraged buyout firms were to attempt a takeover to make the bid easier to finance. Analysts have estimated that selling Yahoo's Alibaba holdings and other Asian assets could fetch anywhere from $8 billion to $13 billion, depending on market conditions. That's a large chunk of Yahoo's current market value of $21.5 billion.

Bartz has argued that selling the Alibaba stake right now doesn't make sense because it will likely be worth even more in the years ahead as China's Internet market continues to grow. That's a notion some shareholders support.

If AOL and the buyout firms decide to pursue Yahoo, a successful bid would first hinge on whether the offer was high enough. Analysts seem to believe Yahoo's board would be hard pressed to turn down an offer ranging from $21 to $23 per share after spurning Microsoft two years ago. That would still be 32 percent to 44 percent above Thursday's closing price, though far less than Microsoft's final offer of $33.

Analysts aren't convinced a combination between AOL and Yahoo even makes sense. "I don't believe putting together two weak, stumbling companies would make the sum greater than its parts," Wedge Partners analyst Martin Pyykkonen said.

He believes another possible scenario might make more sense: Microsoft pouncing on Yahoo with another takeover bid at a price far below its offer of 2½ years ago.

Yahoo CEO Carol Bartz: 'Creepy' Facebook is Biggest Rival

USA Today

 

Yahoo shouldn't be such a hard company to figure out. It's one of the oldest and best-known content providers on the Web. Its news, information, entertainment and communications services attract more than 170 million U.S. visitors each month.

Yet many investors consider Yahoo to be a mystery.

Its stock has lost 15.4% of its value in 2010 as Yahoo failed to show significant gains in page views and ad sales. The big question on Wall Street is whether Yahoo is too scattered and stodgy to fend off powerful competitors led by Google, Facebook, Microsoft and AOL.

Concerns grew last week as Yahoo lost three executives who were trying to freshen its content and attract new fans — including people who use smartphones to access the Web.

No wonder all eyes in the digital world are on Yahoo CEO Carol Bartz.

She was a surprise choice to manage one of the industry's toughest turnaround challenges in January 2009. The move to Yahoo capped a long career in Silicon Valley that included 14 years running Autodesk, a computer-aided software design firm.

Bartz, 62, has spent much of her time cutting costs, and deals, as she tried to sharpen Yahoo's focus on services that appeal to advertisers. For example, last year she agreed to let Microsoft's Bing power Yahoo's search engine. And this year Yahoo bought Associated Content, which assigns news stories to freelancers based on data about subjects that interest Web users.

It's been a long journey from the farms of Minnesota and Wisconsin, where the tart-tongued executive was born and raised, to Yahoo, which is expected to generate $6.5 billion in revenue this year.

Bartz shared her views about Yahoo, prospects for the Internet and the economy with USA TODAY's David Lieberman at the 12th USA TODAY CEO Forum on Sept. 29 at Georgia State University.

The interview took place in front of an audience. Here are Bartz's thoughts, edited for length and clarity:

Social media

Q: Did you guys miss the boat on social media?

A: Social does not just equal Facebook. Social is how people interact anywhere. During the State of the Union address last January, we had so many people commenting the first couple hours that our site went down. That's a social interaction. E-mail is a social experience.

What I don't like is when somebody says, "The only way you find social is (the way Facebook operates)." Did we miss the boat on exactly how they do it? Of course we did. Everybody did.

Q: Who's your biggest single competitor?

A: Facebook — not today, but they could be. If they keep going, they will have the vault of information on everybody in the world, and that's valuable.

Q: Valuable, to the point of being scary?

A: Yes, creepy. I don't care to find an old boyfriend. One time, just to see if they got fat and bald, but then leave me alone. But I'm old.

Advertising

Q: You're introducing new forms of display advertising, including one that makes people feel as though they're turning pages in a magazine.

A: Too much of the advertising (on the Internet) is static and feels old-fashioned. So we like to work with the advertisers to say, "Let's kind of get in there and mix it up. Let's get people jolted awake again."

One of my favorites: Purina Puppy Chow has a little puppy walking across the top of the screen. I sit there like an idiot because it's cute, and I happen to like puppies. It drags the bowl. When Disney did their advertising for Alice in Wonderland you went to the front page, you open it up and this hole appears and you are sucked into it and you are in Wonderland. People clicked on that ad four and five times to replay it. It was fun.

Q: These sound very intrusive to me. Sometimes I want to look at the screen and see what I want to see. I don't want the dog.

A: You can click on any of these and say, "Don't show me this."

Q: You are making me do extra work.

A: Oh, excuse me, please. You are getting a lot of value. This is not like a free lunch here. We just opened a data center in Buffalo, and in its first phase it has 50,000 servers. That is not cheap. So the very fact that you get all this great information is part of the deal.

But we have something called an Ad Interest Manager. You can say, "Don't ever show me an ad again" or "Don't show me this kind of ad or that kind of ad." Less than 1% of the people elect not to.

Q: Consumers also buy TiVo so that they can skip past the ads.

A: If people really don't want ads, they can go find their information however it is they want. It's a free world on that matter. What I'm saying is, I don't think you want bad ads.

Q: You've said that Apple exercises too much control over the ads on its devices, and you said that can't last. Why?

A: If you want to run an ad on the iPad, it has to be approved by Apple. I don't think it is for us to say this ad isn't pretty enough and to go through this whole back-end process of approval. I don't think in the long run that's going to work. Advertisers will have other options.

Leadership

Q: What qualities does a leader need to be able to turn a company around? That's basically what you have been asked to do, right?

A: Yes. Any leader needs to be constantly interested in what's going on in the world, and constantly ready — even when things are going well — to change. In the case of a company as large as Yahoo (you have) to be honest about its shortcomings and be maniacal about how to get it better.

Q: You had no background in computer design when you went to Autodesk. You had no background in media when you went to Yahoo. Did that help or hurt?

A: It's both. You have a freshness of having new eyes, but you also don't have the grounding. So you have to accommodate that with listening, learning, being willing to ask questions that might appear to be less than brilliant, and enjoying the business.

I would never do anything that I didn't enjoy. That's the whole thing. I couldn't go run a fruit business. That wouldn't do it for me. As long as you are inspired by it, you can learn anything.

Q: What do you look for when you hire people?

A: I hire very high-level people, and so you are really checking to make sure they have a cultural fit and that sort of thing.

When you are talking about hiring somebody in their first, second, third job, you really are looking for excitement, some humbleness. So: eagerness to learn, eagerness to be involved in whatever the company is doing — and being willing to do the work you have to do at entry level.

Q: How do you avoid groupthink?

A: Go talk to people at all levels in the organization and honestly ask their opinion. If you sit there quiet and interested, it comes out.

Q: They will say to you, "Carol, I think that you are making a big, big mistake"?

A: Yes. I don't shoot people. In fact, I would shoot people that wouldn't take a risk.

Somebody showed me a slide to prove they were risk-taking and the top of the slide said "calculated risk." So I said, "OK, you already know it is going to work, right?" "Oh, yes, it will work." That's not a risk. That's just not a risk.

Connected TVs

Q: A lot of Internet-connected TVs offer Yahoo Widgets — apps that make it easy for viewers to do things like get sports scores or watch certain videos from the Web. What are the prospects for that business?

A: There's a whole lot of interesting tectonic plates moving around. When you have a nice, large screen, there's a lot you can do with it. And Yahoo wants to be there.

Q: How concerned are you about Google TV, a new service that also provides an interface for TV viewers who want to access the Web?

A: It is not a slam-dunk. There's a lot of cable companies that want that business. There's a lot of TV makers that want Internet applications. So it is pretty hard whenever there's a new market forming to say, "Oh, that's the leader." It takes awhile to settle out.

Q: About 86% of the country gets video from cable or satellite providers, and 2% get it from the Internet. How long will it be before that changes?

A: There's different kinds of video. If you are asking me whether the half-hour (TV) show and the hour show is going to be all consumed on the Internet, I don't think (that will happen) for a long time. It is going to take awhile to overcome the foothold that cable has.

Q: How about for people who don't need 200 channels and just want to watch some news, a little bit of entertainment, maybe some sports?

A: There's 220 million websites, not 220 channels. It's too much. You want to have a place where you can trust what the news is or trust what sports is and get your job done.

Q: Could you envision a Yahoo TV newscast?

A: We have that now, in a way. We have updates on Tech Ticker, one of our most popular shows. We have Primetime in No Time, which basically tells you in three, four minutes everything that happened in prime time. We have Daytime in No Time, which tells you what happened on all your soaps and Oprah and all that.

People flood to that stuff because who has got time to look at all of it? And those three- and five-minute video shows are very popular with the advertisers.

What is Yahoo?

Q: Yahoo has great assets, but some people say they don't know what the company does or where it is going.

A: That exists in New York City and about 30 miles outside Silicon Valley. The rest of the world seems to know.

Yahoo is the largest media company in the world. We are twice as large as the nearest competitor. We do it through innovative technology and bringing people information they need to manage their lives. We serve up — and these numbers I hope will astound you — 10 billion ads a day.

Q: Where do you feel that Yahoo has a weakness?

A: There's three big places that people go on the Internet: Facebook, Yahoo, Google. We play to our strengths, which by definition means we have weaknesses in other areas.

Q: In January you gave yourself a B-minus for the first year. How about this year?

A: I'm off the grading thing. I'm just going to declare that we are pass-fail, and I pass.

Q: Would you have hired someone like you to be CEO?

A: Let me answer a question you didn't ask. Am I the perfect person for the job at Yahoo? No. Am I good for the job? Yes.

The economy

Q: What's your forecast for the economy?

A: Was there the word "economist" on my business card?

Q: You have to have some idea, to make a business plan.

A: Of course you do. Now let me be serious. Last year, we said, by the third or fourth quarter of 2010, things will be better. This year, we are saying, by the third or fourth quarter of 2011.

We can't seem to get stability around employment, housing — all those issues that are making consumers less confident than they should be.

To be honest, we don't understand what goes on in Washington. A lot of rules keep changing. That erodes confidence. It is far from a healthy, vibrant economy.

Q: Is that a commentary about President Obama's handling of the economy?

A: I am actually a very private political person, so I would not like to comment on that.

Q: How will you vote in California? Former eBay CEO Meg Whitman is the GOP candidate for governor against Jerry Brown and former Hewlett-Packard CEO Carly Fiorina is the Republican against Sen. Barbara Boxer?

A: I'm voting for Meg and Carly, absolutely.

Local

Q: You are starting a local news operation for San Francisco. Tell us about your plans to offer local information.

A: We all live in a place. You live in small communities, and you are very interested in what happens in those communities from police blotters to what happened in the city council or the neighborhood watch. It is interesting to the consumer.

And it is interesting to the advertiser because it is the ultimate target. Statistics are 95% of our purchases are (made) within 2 miles of our house, 5 miles of our house.

Q: There are a lot of people in local news. AOL has Patch. Local newspapers, radio stations, TV stations are online. Where do you fit in?

A: We have partnerships with local publications and an association with newspapers. They send us news feeds. We send viewers back to their dot-com locations. So we actually are very symbiotic with people like that.

But to answer more the spirit of your question, why can we succeed? I will give you the CEO answer: We do a better job. A better job in being a partner with local advertisers. A better job partnering with people actually writing from the community, not about the community. We have a lot of experience in this.

Regulations

Q: Can you clarify your position on net neutrality — the idea that Internet providers shouldn't be allowed to cut deals to transmit information from some Web services faster than others?

A: Everybody should have equal access (to the Internet). But we have to work out a system whereby folks that laid fiber and put the (broadband) infrastructure in get value for that.

I'm not sure that I'm smart enough to figure the answer out. But I don't think that two companies, or just the government, get to decide. People have to come to the table, get off the end positions and be more practical.

Q: Rules should apply equally to wired and wireless?

A: I think so.

Q: The Federal Trade Commission is looking at the Children's Online Privacy Protection Act. In 1998 it barred Internet companies from collecting data on kids under 13. Should it apply to phones, gaming consoles and interactive TV?

A: Of course. Listen, anything that can protect our children from bad people, we have to do.

Q: Should it include teens?

A: I would have no problem with that.

News

Q: Yahoo is one of the Web's most popular news sources. What distinguishes your news from Google's or AOL's?

A: We not only license news feeds (for example from Reuters and the Associated Press), we also have our own editorial voice. We have human editors watching what seems to be interesting people, and feature that more prominently. So we are constantly tweaking what is delivered.

For instance, on our front page we have a module called "Today," which is what's happening. Every five minutes we serve up 32,000 different variations depending on what you seem to be interested in. So it is very personal. It is engaging.

Then we just bought a company called Associated Content: 380,000 writers, bloggers, in all the towns and cities who also contribute to this news feed. So it is a combination of what people can do and what machines can do.

Q: Do you ever say, "Look, folks, here's something that you may not be interested in but you really ought to know"?

A: Absolutely. Listen, just because enough people weren't reading about the oil spill, we wouldn't pull it off the page. That's again what editors are for, that's what people's brains are for, to make those kind of judgment calls.

Q: What's the basis for those judgments? The judgment you'd make for the National Enquirer would be different from what you'd make for The Economist.

A: Yes. We are neither the left voice nor the right voice. We try to be the center voice.

We are just selecting news that people actually have liked to read about. It is not our job to round people out. It is our job to be balanced and have a voice that is balanced and is dependable and trustworthy.

Q: News organizations regularly run stories that antagonize some advertisers. How do you handle that?

A: We try not to antagonize our advertisers. Please, we never want to antagonize you. And we are careful. For instance, we have very, very intense technology that scans for nudity and bad words.

But when you have as many users as we do, almost 170 million in the U.S., everybody has opinions and (some) tell me that we should not have written this story and that story. But it isn't about doing something untrustworthy.

Q: They used to say that Katharine Graham was a great CEO at the Washington Post because she loved the newsroom. That's not your background, but do you love the newsroom — or is it just a business?

A: What I like is the technology and how we can serve up information that, while we are global brand, feels very local and personal.

Mobile

Q: Where does mobile fit into your strategic plan?

A: We are just neck and neck with Google for mobile installations in the U.S. We don't have an operating system, but we have Yahoo Mail, Messenger, Finance — all those things. Mobile is huge for us, especially in emerging parts of the world where the only on-ramp to the Internet is going to be through a small screen. They are not going to have a desktop or laptop at home. But for the developed world, I don't think you are going to let this (small) size screen be the only ramp on to the Internet.

Q: If you get a Google Android phone, all the Google applications just work. You are drawn into their world. Does Yahoo need a device of its own?

A: It isn't Google that gets to do that: It is what the carrier wants to do. By the way, there are many instances around the world where what comes up are Yahoo applications, not Google applications, even on an Android phone. The only one that actually controls that precisely is Apple.

Q: So will we start seeing deals between Yahoo and some carriers?

A: Sure. We have deals now with carriers. A lot of it is international, but we power AT&T's website. We are really all over the place. If you are a Yahoo Finance advocate, you want Yahoo Finance in your mobile phone. So people's habits can stay with them.

ABOUT CAROL BARTZ

Born: Winona, Minn.

First big break: The president and managers of a bank where she worked while in high school helped her to get a college scholarship. "Without their help, I probably wouldn't be where I am today."

College: University of Wisconsin, B.S. in computer science.

First job after graduation: Selling automated banking services. "I drove around in my go-go boots to small towns and tried to convince little banks to automate."

Best advice: From her grandmother, who raised her on a farm. "I was in the machine shed with my brother. We heard a rattlesnake above us and ran for Grandma. She grabbed a shovel, knocked the snake out of the rafters and chopped its head off. Then she said, 'You could have done that.' And you know what? She was right."

Currently reading: Allegra Goodman's novel The Cookbook Collector.

Favorite movie: Right now I'd say the Swedish version of The Girl With the Dragon Tattoo.

Current music playlist: Jack Johnson.

Sports: Golf.

Passion: Gardening. "It's the way I calm down."

Yahoo losing 3 top Execs, Raising more Worries

Associated Press

 

 

Three top Yahoo Inc. executives are leaving the slumping Internet company in an exodus that could put CEO Carol Bartz on the hot seat as she approaches the end of her second year trying to engineer a turnaround.

The company disclosed the departures Thursday, confirming an earlier report published on the technology site All Things Digital.

The defecting executives are: Hilary Schneider, an executive vice president who oversaw Yahoo's advertising in the U.S.; David Ko, a senior vice president in charge of mobile and audience; and Jimmy Pitaro, a vice president who ran the division that produced the heavily trafficked news, sports and finance sections of Yahoo's website.

"These are some of the most important people at the company," said Standard and Poor's equity analyst Scott Kessler. "It's definitely going to put more pressure on Carol Bartz."

Bartz, known for her brash, sometimes profane language, has been cutting costs while trying to find ways to get people to spend more time on Yahoo's website instead of rapidly growing online hangouts such as Facebook and Twitter.

In doing so, Bartz also abandoned any hope of catching Google Inc. in the lucrative Internet search market. She has farmed out the bulk of the company's search technology to Microsoft Corp.'s Bing.

Although analysts have applauded Bartz for bringing more discipline to Yahoo, her strategy has yielded few dividends. Advertisers are still spending more at Google and Facebook, leaving Yahoo in a financial funk that began under her two predecessors, former movie mogul Terry Semel and company co-founder Jerry Yang.

Yahoo's stock price also has fallen by about 15 percent so far this year, leaving it even further below the $33 per share that Microsoft was prepared to pay to buy the entire company in May 2008. Yang balked at the offer, prompting Microsoft to withdraw the bid.

Yahoo shares fell 17 cents Thursday to close at $14.17.

Bartz, 62, has cautioned it could take several years to revive Yahoo seo and pointed out that Apple Inc. didn't become a Wall Street darling as soon as Steve Jobs returned to the company in 1997.

Yahoo's board gave Bartz a four-year contract when it hired her in January 2009.

But that the latest personnel losses could prompt some second-guessing about whether the board made the right choice, Kessler said, given that Bartz has been unable to stop an exodus of talent that began under Semel and Yang. "This will increase the wattage of the spotlight on that issue," he predicted.

Yahoo has persuaded Schneider to remain with the company while it searches for her replacement. The company hopes to fill that key job by the end of the year.

Ko is being succeeded by Raymond Stern, who joined the company last year as senior vice president of North America partnerships. Yahoo didn't announce who will replace Pitaro.

"We wish them all the best in their future endeavors," Yahoo said in a statement about the departing executives.

Yahoo will Continue to Modernize its Sites until Mid-2011

Reuters

 

Yahoo Inc Chief Executive Carol Bartz said the company would keep modernizing its online properties through the summer of 2011 as it strives to increase the time people spend on its sites.

Bartz told analysts at a briefing on Wednesday that Yahoo was focused on infusing its network of more than a dozen websites with additional social media, video, and local content. The network includes shopping, sports and finance sites.

She said Yahoo had no plans to follow competitors like Google Inc and Microsoft Corp by developing its own smartphone device or operating system software for smartphones.

"I don't want to have a handset. I don't want to be in that side of the business," said Bartz. "We want to have the best, best applications."

Yahoo has been reorganizing its business, shedding assets and acquiring new companies under Bartz, who began her current role in January 2009.

On Wednesday, Yahoo announced a partnership with Zynga in which Zynga social networking games, such as FarmVille, will be available across Yahoo's online properties.

Last month, Yahoo acquired Associated Content, an online publisher that offers articles and videos created by a network of freelancers.

Last July, Bartz signed a 10-year deal with Microsoft to save hundreds of millions of dollars a year in expenses by shifting Web indexing chores to Microsoft while Yahoo focuses on improving searching.

"Yahoo has its focus, it is excited about its future, and it has its pride back," said Bartz, who made headlines two days ago for using an expletive in a rebuke of a technology blogger who was interviewing her onstage at a conference in New York.

Yahoo is facing increasing competition from other Internet companies.

Since September, when Yahoo launched a $100 million advertising campaign, unique visitors to Yahoo websites in the United States declined 2.6 percent to 155.6 million in April and total page views declined 11.4 percent, according to comScore, an Internet analytics company in Reston, Virginia.

In contrast, unique visitors and page views increased in April at Google, Microsoft and Facebook.

Yahoo executives at Wednesday's analysts' event said the company expects to complete integration of its search technology with Microsoft in all 59 countries in which it operates by the second quarter of 2012.

Some analysts and investors have expressed concern that Yahoo is offsetting cost savings from its deal with Microsoft by spending money on other parts of the business.

Bartz defended the spending, explaining that Yahoo needed to retrofit many of its websites to bring them up to date and to make them easier to customize.

Nokia Partners with Yahoo

The Wall Street Journal

 

Nokia Corp. and Yahoo Inc. unveiled a partnership to work together on their email, chat and navigation services in an effort to bolster their respective positions in the world of mobile phones.

Nokia will power Yahoo's maps and navigation services, while Yahoo will run the email and chat programs on Nokia's Ovi platform. The companies weren't disclosing the financial terms.

Nokia and Yahoo hope the alliance will improve their profiles in the industry, with Nokia looking to expand its awareness in North America and Yahoo getting its services in more mobile phones around the world, particularly in the emerging markets. Both companies need a catalyst; smartphone players such as Apple Inc., Research In Motion Ltd. and Google Inc. have outpaced the market.

"It's a great example of an approach to partnership, which is increasingly part of our DNA," said Yahoo Chief Executive Carol Bartz.

"This fits well with two companies with key complimentary strengths," said Nokia Chief Executive Olli-Pekka Kallasvuo.

The companies say the partnership will also allow Yahoo to better focus its resources on its consumer experience and other services. Ms. Bartz said that despite the perception of Google's dominance, Yahoo is "neck and neck" in providing Web services. However, she acknowledged that her company was behind in mapping and navigation services. Yahoo also stands to benefit globally because its name will accompany the chat and messaging services found on Nokia phones found around the world.

The Internet search company also taps into Nokia's considerable navigation services. Nokia spent $8.1 billion to acquire Navteq and has made a string of other acquisitions to augment its portfolio of location-based services. "I would say Nokia's mapping offering is unique and second to none in the marketplace," Mr. Kallasvuo said.

Nokia, meanwhile, benefits from Yahoo's strong name recognition in the U.S. The handset maker, one of the largest technology companies in the world, has struggled with the awareness of Ovi, particularly in North America. It hasn't had much success getting the U.S. carriers to push the service or its phones, although the company has made a more concerted effort to focus on the market in the past few years.

While Nokia is the world's largest mobile phone maker, it continued to lose market share, falling from 36.2% to 35% in the first quarter, according to information technology research firm Gartner Inc.

Some critics believe neither company is doing enough to catch up with the industry's faster growing players. "This is a co-branding agreement when both companies probably need more structural changes," said Avi Greengart, an analyst at Current Analysis.

Yahoo boss making bank for what?
Bloomberg

CEO Pay Breaks Glass Ceiling as Bartz Gets $47.2 Million in ‘09
Chief executive officers’ pay is shattering the glass ceiling.

 

 

Boosted by a $47.2 million package for Carol Bartz of Yahoo! Inc. and $26.3 million for Irene Rosenfeld of Kraft Foods Inc., compensation for woman CEOs at the biggest U.S. companies is booming.

Sixteen women heading companies in the Standard & Poor’s 500 Index averaged earnings of $14.2 million in their latest fiscal years, 43 percent more than the male average, according to data compiled by Bloomberg News from proxy filings. The women who were also CEOs in 2008 got a 19 percent raise in 2009 -- while the men took a 5 percent cut.

“When you see numbers like this, one can truly say that the glass ceiling in corporate America has been shattered,” said Frank Glassner, CEO of San Francisco-based Veritas Executive Compensation Consultants LLC. “I don’t remember seeing women ever getting paid more than men.”

Graef Crystal, a pay expert who analyzed the data for Bloomberg News, said that “compensation committees are saying we don’t want to have any trouble” over underpaying women, “so if we err, let’s err on the side of giving them too much.”

Darwinian competition is also playing a role, said Sheila Wellington, a professor of management and organizations at New York University who studies women business leaders.

“These are the strongest, fittest and toughest who survive,” according to Wellington, who said she was offered half the salary of male peers for her first job at a mental health facility in 1968. “They’ve had to negotiate all the way up the ladder.”

An Unusual Option

Compensation consultant Todd Gershkowitz, senior vice president of Los Angeles-based Farient Advisors, said he couldn’t recall a female CEO ever receiving as much as the 61- year-old Bartz. Her package was bolstered when she joined in January 2009 by a five-million share options grant from Yahoo, valued at $27.2 million, and a $7.5 million share grant.

The option is unusual in that it begins to vest, or become cashable, if Yahoo stock hits and stays above $17.60, or 50 percent above its $11.73 price on the date it was granted, for 20 straight trading days before 2013, Crystal said. Most options vest on a fixed timetable, irrespective of price. Yahoo, based in Sunnyvale, California, rose above the $17.60 level last month, falling before the option could vest.

Resting Pythons

“Welcome aboard” packages are standard fare for new CEOs. Yahoo went overboard when it added $7.4 million in additional stock and options to Bartz’s pay just 25 days after the initial award, Crystal said.

“Why does she need to eat again 25 days after she swallowed an entire pig?” he said. “Some pythons need to rest before another meal.”

The $42 million value attributed to the option and stock grants in Yahoo’s compensation disclosure wasn’t realized in 2009 and is linked to “increases in long-term shareholder value” and individual and company financial performance, said Dana Lengkeek, a Yahoo spokeswoman.

In the broader workforce, women working at least 35 hours a week in the first quarter of 2010 received 79 percent of the wages earned by men, according to the U.S. Labor Department. Female heads of companies of all sizes made about 75 percent of what men did in a 2009 department survey of 1.1 million CEOs. About 24 percent were women.

Pay riches for women CEOs at big companies may be “an important indicator, but not a milestone because of what happens down the line” among average workers, said Robin Ferracone, founder of Farient.

Rosenfeld’s 41 Percent

“Even at the CEO level, with equal pay comes equal scrutiny and a narrower band of acceptable behavior,” said Ferracone, whose clients have included Margaret Whitman, the former EBay Inc. CEO, and Carleton Fiorina, the former head of Hewlett-Packard Co.

At Kraft, Rosenfeld received a 41 percent raise last year as the shares fell behind the S&P 500’s performance by 21 percentage points. In a Crystal model that adjusted pay for shareholder return, she would have taken an $18 million pay cut, and was rated as the 16th most overpaid CEO among 271 studied.

Crystal looked at S&P 500 companies that had filed 2009 fiscal year proxies by April 16. (Click here to see a sortable table and other interactive graphics on CEO pay.)

Rosenfeld, 57, was awarded $10.6 million in a performance- based bonus, which Kraft’s proxy attributed in part to her pursuit and acquisition of Cadbury Plc, which made Kraft into the world’s largest confectioner.

‘Dumb Deals’

To win Cadbury, Rosenfeld had to stand up to Warren Buffett, CEO of Berkshire Hathaway Inc., which has an 8 percent stake in Kraft. Buffett said Kraft made “dumb deals” by overpaying for Cadbury and selling its pizza brands.

When asked about Rosenfeld’s pay at Berkshire’s annual meeting, Buffett said, “We’ve got a compensation system at Berkshire which I regard as quite rational and there’s a lot of companies in the U.S. that have different compensation systems,” according to the Daily Telegraph of London.

Michael Mitchell, a spokesman for Northfield, Illinois- based Kraft, said company officials “strongly believe” the Cadbury acquisition was “absolutely the right decision” and will boost earnings. The pay package for Rosenfeld, who led Kraft to “strong operating results in 2009” in an “extremely volatile and challenging operating environment,” was driven by a payout from a 2007-2009 long-term incentive plan, he said.

Extended Holding Requirements

Other female CEOs in the S&P 500 considered overpaid in 2009 in the Crystal model were Susan Ivey of Reynolds American Inc., Mary Agnes Wilderotter of Frontier Communications Corp. and Indra Nooyi of PepsiCo Inc.

Shareholders at Reynolds last week defeated a resolution that would have required an extended holding requirement for stock awards. Ivey received $6.24 million in stock last year. A similar resolution is pending a vote at Frontier, where Wilderotter got $3 million in stock.

“We’re concerned their high levels of stock compensation and lack of holding requirements could mean pay isn’t sufficiently tied to performance,” said Brandon Rees, deputy director of the office of investment for the AFL-CIO, a supporter of the resolutions.

Debra Cafaro, CEO of real estate investment trust Ventas Inc. for the past decade, received $6.25 million last year, and was rated as underpaid in the Crystal model. She took an 18 percent pay cut in 2009. Ventas has been the best performing stock in the S&P 500 financial sector under her tenure, with a 35 percent compound annual return for shareholders.

Twice as Likely

“Once you’re in the CEO seat, I believe directors use a very even-handed approach to compensation,” Cafaro, 52, said. “But getting there can be a different story and women executives may be judged more critically.”

Ventas returned 12 percentage points above the S&P 500 last year for shareholders. Cafaro’s base salary and non-equity incentive compensation were increased by 3.5 percent and 33 percent, respectively, while her equity awards decreased 34 percent.

“The compensation committee believes the CEO should have the greatest alignment with our shareholders, and, therefore, her compensation structure was designed to reflect a higher sensitivity to our performance than the compensation structure of other named executive officers,” a company filing said.

Women CEOs are almost twice as likely to have been named to the job from outside, as Cafaro was, than from within, according to a Harvard Business Review study by Herminia Ibarra, a professor of organizational behavior, and Morten T. Hansen, a professor of entrepreneurship.

‘Outside-the-Mold’

There is a strong market for “outside-the-mold” candidates today and not a huge supply, so there’s no surprise it’s reflected in their salaries, Ibarra said.

Being brought in means they’ll be paid a premium, Farient’s Ferracone said. Companies are emphasizing diversity and having a woman at the helm fulfills that agenda, which can lead to an advantage when negotiating pay, Ferracone said.

“Having a female CEO is an opportunity to blaze a trail, so some companies will say, ‘What do we have to do to get her?’” said Andrew Oringer, a compensation and benefits lawyer at law firm Ropes & Gray in New York.

Yahoo's Bartz Downgrades Herself For Moving Too Slowly

Bloomberg

Carol Bartz gives herself a B-minus in her first year as chief executive officer of Yahoo! Inc., saying she could have moved faster to reorganize the company and strike a Web-search agreement with Microsoft Corp.

“It was a little tougher internally than I think I had anticipated,” Bartz, 61, said in an interview at Yahoo’s headquarters in Sunnyvale, California. “I did move fast, but this is a big job.”

Bartz, who marks her one-year anniversary as CEO next week, is striving to keep Yahoo’s 15-year-old site relevant in an era of Twitter and Facebook. Yahoo’s sales have fallen for four straight quarters, and its stock trailed the Nasdaq Composite Index in the past year. Bartz expects Yahoo’s sales and profit to grow in 2010 as it makes acquisitions and improves products.

“Carol was dealt a pretty tough hand,” said Ryan Jacob, portfolio manager of the Los Angeles-based Jacob Internet Fund, which holds about 100,000 Yahoo shares. “A lot of what she’s put in place -- we’ll know in the next year or two really whether it pays off. I think at this point it’s still a bit up in the air.”

After becoming CEO, Bartz cut her staff by 5 percent, shuttered underperforming businesses such as the GeoCities Web- hosting site and installed her own management team. In July, she struck a deal with Microsoft Corp. to collaborate in Web search and advertising, letting it cut capital spending by a projected $200 million.

‘Tough Hand’

The company also has been hiring people for sales and engineering, tapping into the savings generated by its cost- cutting efforts.

“A very good company kind of got buried,” Bartz said. “It is coming out.”

Roy Bostock, Yahoo’s chairman, gave Bartz an A-minus for her first year, said his assistant, Marla Evans. He wasn’t available to comment further today, she said.

The CEO of Autodesk Inc. from 1992 to 2006, Bartz took the reins at Yahoo from the company’s co-founder Jerry Yang. He rankled investors in 2008 by spurning a $47.5 billion takeover attempt by Microsoft. Yang then pursued an ad partnership with Mountain View, California-based Google Inc. That deal fell apart in late 2008 after the U.S. government threatened to challenge the agreement.

By the time Bartz took over, Microsoft said it was no longer interested in an acquisition, preferring a partnership instead. She worked out that deal about six months after her arrival. Under the 10-year agreement, aimed at challenging Google, Yahoo will use Microsoft’s Bing search engine on its Web sites.

Bing Partnership

Yahoo will sell ads that appear next to Internet-search results, sharing the revenue with Microsoft. Bartz expects the deal to get regulatory approval early this year.

The Microsoft deal will help boost operating margins and let Yahoo focus on other services, such as the home page and e- mail, Jacob said. Yahoo expects to achieve profit margins of 15 percent to 20 percent by 2012, up from about 6 percent in 2009.

Yahoo was unchanged at $16.70 at 4 p.m. New York time in Nasdaq Stock Market trading. The shares climbed 38 percent in 2009, a year in which Google’s stock more than doubled and the Nasdaq Composite Index advanced 44 percent. Yahoo’s stock tumbled 48 percent in 2008, when the Microsoft acquisition talks fizzled.

Sales Fall

Investors have held back from buying Yahoo shares because of the sales slump, said Martin Pyykkonen, an analyst with Janco Partners Inc. in Greenwood Village, Colorado. He rates the stock a hold. Third-quarter revenue fell 12 percent to $1.58 billion from the year-earlier period.

Bartz said that while the stock price indicates the company has been in the “penalty box,” the share price is fair. The sales declines aren’t surprising, given the recession and a broader slowdown in advertising, she said.

“We came out of one of the worst climates ever,” Bartz said. “And if you look at growth of Fortune 500 companies, only being down 12 or 15 percent is damn good. I’m not going to apologize for our growth.”

Yahoo already is benefiting from the rebounding economy, which is encouraging companies to buy online ads, said Gene Munster, an analyst at Piper Jaffray & Co. in Minneapolis. He said Bartz eventually should be able to get sales growth up to 10 percent annually.

“We believe in Carol Bartz and believe that she is going to get the revenue growth to a point that’s acceptable,” Munster said.

More Acquisitions

Bartz said she plans to do more acquisitions this year, probably of less than $1 billion apiece. Potential targets include overseas companies and data-analytics businesses that help advertisers assess their results, she said.

“Last year people talked about, ‘Oh, Yahoo is trying to get smaller,’” she said. “We were never trying to get smaller. We were just trying to get more focused.”

Bartz said the company continues to improve its products, such as its home page, e-mail service and Yahoo SEO, though she didn’t give specifics. Last year, Yahoo unveiled a new version of the home page, the site’s first major upgrade since 2006.

The home page is the entry point to dozens of services, including Yahoo Finance and the Flickr photo site. The new design lets users easily access other companies’ sites, such as Facebook and Twitter, from the page.

The role of Web portals is shrinking, because more users are moving to social-networking sites, said Sameet Sinha, an analyst with JMP Securities LLC in San Francisco. He gives Bartz a B-minus grade as well and has a “market perform” rating on the stock.

“Aggregation worked in the early stages of the Internet, when people were less sophisticated,” said Sinha, who doesn’t own Yahoo shares personally.

The fact that the company still serves up billions of pages to users daily shows that Yahoo plays an important role on the Internet, Bartz said.

“You’re just going to see Yahoo bloom more,” she said.

Carl Icahn, Yahoo Board Split Amicably

From USA Today

Activist investor Carl Icahn has decided his work is done at Yahoo after muscling his way on to the slumping Internet company's board nearly 15 months ago.

In a resignation letter Friday, Icahn said he felt like it was time to leave Yahoo (YHOO) so he could spend more time on his investments in other companies.

"I don't believe that it is necessary at this time to have an activist on the board of Yahoo and currently my attention is focused on other matters," Icahn wrote.

Icahn, an outspoken billionaire, spent several months last year denigrating Yahoo co-founder Jerry Yang and the rest of the company's board after Yahoo turned down an opportunity to sell to Microsoft for $47.5 billion, or $33 a share.

That snub still looks like an expensive mistake, with Yahoo shares closing Friday at $17.22.

Icahn struck a truce with Yahoo to get on the board in August 2008 and he is apparently leaving on an amicable note.

In his letter, Icahn praised Yahoo's current chief executive, Carol Bartz, saying she is "doing a great job." Bartz replaced Yang as CEO nine months ago.

Icahn also applauded Yahoo's decision three months ago to hire Microsoft to provide its search results in the United States for the next decade. It's a partnership that Icahn tried to bring together while he was still seeking to get Yang fired. The proposed alliance between Yahoo and Microsoft still requires regulatory approval.

Yahoo, which is based in Sunnyvale, Calif., also had kind words for Icahn, saying it is "grateful for his active role in shaping the future" of the company.

A Yahoo spokeswoman said there are no immediate plans to fill Icahn's seat on the board. Another director, Maggie Wilderotter, plans to step aside at the end of the year.

After Wilderotter's departure, Yahoo will be left with 10 directors, including Yang. Two of other directors, John Chapple and Frank Biondi, joined the board as Icahn's allies.

Icahn remains one of Yahoo's largest shareholders with a 4.5% stake that is currently worth slightly more than $1 billion. He and his investment affiliates spent $1.8 billion accumulating a 5.5% stake last year, but whittled the holdings two months ago by selling 12.7 million shares.

His resignation letter gave no indication whether he plans to sell more of his Yahoo stock now that he has left the board.

Yahoo's fortunes have been sliding for the past three years as Google SEO widened its lead over Yahoo SEO search market and people began spending more time at other popular online hangouts such as Facebook.

Earlier this week, the company announced that its third-quarter earnings more than tripled as cost cutting helped to offset a 12% decline in revenue. The revenue erosion wasn't quite as bad as earlier this year, raising hopes that the company will fare better as the U.S. economy pulls out of its worst recession in 70 years.

Yahoo's Carol Bartz: We're Not Google
Story from Mercury News

Yahoo Chief Executive Carol Bartz asked shareholders to stop comparing the Sunnyvale Internet company to Google, its biggest rival, at a sparsely attended and subdued annual meeting Thursday morning.

The meeting marked a break from the past, when shareholders have repeatedly voiced their disappointment with Yahoo's management and its failure to respond to competitive threats and increase the value of the company's shares. Last year, shareholders withheld support from the board of directors in record numbers after the company rejected a bid from Microsoft to buy Yahoo for $47.5 billion or $33 a share.

"I was hoping that the Microsoft deal would go through, not because I'm a big Microsoft fan but because I don't think the share price will get that high again," said Richard Hackenbery, who became a Yahoo shareholder in 1999.

Hackenbery and his wife, Marilyn, drove from Berkeley to the meeting, which was held at the Santa Clara Marriott, to hear Bartz, who became CEO in January, replacing co-founder Jerry Yang.

Yahoo's shares traded at $15.53 on Thursday, up 8 cents and up from a low of $8.94 in November last year.

At the meeting, Bartz said if and when there is a deal with Microsoft, they would announce it; otherwise, she had "nothing to say."

Yang, who sits on the board of directors and holds the title Chief Yahoo, attended the meeting but did not address it. He later chatted informally with shareholders. David Filo, the other co-founder, did not attend.

Directly addressing shareholders for the first time, Bartz said they should think of Yahoo as the largest online media company, "the place where millions of people come to check what is important to them every day and organize their lives."

She also described how she was streamlining Yahoo's organizational structure and shutting down poorly performing properties, which she described as "space debris."

When asked why Yahoo continues to lag Google in financial performance and employee productivity, Bartz said it was time to stop comparing the companies to each other because they have different business models. "Please, this direct comparison model to Google is not fair and is frankly not relevant," she said.

While Google is purely a search-advertising company, Yahoo SEO is only part of Yahoo's business, she explained.

Bartz also said that Yahoo did not have a "vision problem" but that it had an "execution problem," which it was working hard to fix.

"I was very impressed with her," said Marilyn Neuterman, a retiree living in San Jose. "She gave good, clear answers and conducted a nice meeting."

In formal business at the meeting, shareholders re-elected the board of directors and followed the company's recommendation on four additional proposals, including three that dealt with appointing an accounting firm, the stock plan and employee stock options. Shareholders vetoed a fourth proposal that would have given them a say on executive pay.

Carol Bartz: You Can't Make a Baby with 9 Women in 1 month "All Things Digital" Conference

Carol Bartz Talks Shop At The "All Things Digital" Conference

Yahoo's Taskmaster
Carol Bartz is shrewd, strong-minded, blunt, and disciplined. (Don't even think about leaking company information!) But can this no-nonsense tech veteran come up with a plan to save Yahoo? Story from Fortune

Carol Bartz wasn't interested when Yahoo co-founder Jerry Yang first approached her about rescuing the company he'd created at Stanford University 15 years ago. As she drove to his home in Los Altos Hills one day last December, she was prepared to be polite and maybe offer some advice. Bartz, who had retired in 2006 from design-software maker Autodesk, didn't need a new gig, and she certainly wasn't looking to play savior to a company she figured needed a CEO with media-industry chops - not her specialty.

Out of respect for Yang, though, she found herself in his living room, asking him to draw her an organizational chart. "It was like a Catholic school kid diagramming a sentence," she later told business partners. Lines crisscrossed everywhere, with no clear system of accountability. By the time he finished, the hooks were in. "I got it," she told Yang. "What you need is a manager."

That's exactly what Yahoo (YHOO, Fortune 500) got when it hired Bartz, 60, as CEO in January. She is likable yet hard-charging, given to salty language, and always brutally candid. (In March she told a questioner at a Morgan Stanley conference that she uses Google's online maps because they're better than Yahoo's.) Bartz is also a known quantity in Silicon Valley circles: a seasoned executive who understands technology, is skeptical of the kinds of juvenile-sounding job titles that proliferate at Yahoo (Yang remains Chief Yahoo, for example), and thrives under pressure.

Perhaps most important to the Yahoo board, she has shown she can jump-start ailing companies. During her 14-year watch at Autodesk (ADSK), she delivered compounded annual sales growth of 13%, and the stock price climbed more than eightfold.

Bartz's celebrated management skills are going to be put to the test: Once the wunderkind of the web, Yahoo has floundered as the likes of Google, Apple (AAPL, Fortune 500), Facebook, and Twitter have redefined online communication and commerce - and have grabbed much of the buzz along the way. Marketers have stopped pouring money into Yahoo in favor of Google's more pointed, search-driven ad platform as well as a passel of specialty sites such as Glam.com and Break.com. Last year Yahoo's revenue rose an anemic 3% to $7.2 billion; by contrast the company increased annual sales 47% in 2005. Many investors and analysts believe that Yahoo, despite spurning a $45 billion buyout bid from Microsoft (MSFT, Fortune 500) in 2008, ultimately will be acquired or stripped of its most valuable parts.

Bad as things are, though, Yahoo remains one of the most popular online destinations, and users spend more time on Yahoo sites than on any other major web property, including Google (GOOG, Fortune 500). Bartz has the opportunity to harness that popularity to get the business growing again. But first she'll have to come up with a strong vision for Yahoo, a mission that seems at odds with her reputation as a taskmaster and disciplinarian. Is Yahoo a media company, selling advertisers access to its 562 million worldwide unique visitors? Is it a technology conglomerate that builds and delivers applications and services over the web? Or is it perhaps something else altogether?

There's little question that Bartz can make tough, unsentimental choices about which assets and people Yahoo should jettison. (She's already well on her way to fixing that messy org chart and reining in its unstructured culture.) But now she must do something much harder: She needs to figure out and explain what she wants Yahoo to be.

***

None of this would be Bartz's problem if she had simply stayed retired. After stepping down from the Autodesk CEO job in 2006, she busied herself volunteering with charities, vacationing in Hawaii, tending her garden in Atherton, Calif., polishing her golf game, and serving on the boards of Autodesk, Cisco, Intel, and NetApp. (She's since left the Autodesk and Intel boards.) The first year, she told friends, was great. The second, good. By late 2008 - well, the retirement thing was getting old. Bartz missed the thrill, and even the stress, of daily business life.

Though she comes off casual, even folksy, in conversation, she has admitted to associates that she's a bit of a crisis junkie. Bill Coleman, a Silicon Valley executive who worked with Bartz two decades ago, recalls taking a trip to Shanghai in November with Bartz and her husband, Bill Marr. (Bartz and Marr have three children, all adults.) "When my wife asked her how she was doing with the transition, she was like, 'You know, this is much harder than I thought. I like golf - I don't love golf. I like Hawaii - I don't love Hawaii.' You could just tell she was ready for something."

Carol Ann Bartz was born in the summer of 1948 in Winona, Minn., a river town on the Wisconsin border. Bartz's mother died when she was 8, and her father, a mill worker, disciplined his kids with a belt. When she was 12, she and her younger brother moved to Wisconsin to live with their maternal grandmother. In high school Bartz was a drum majorette and a science and math geek, and went on to earn a computer science degree at the University of Wisconsin. She worked her way through college as a cocktail waitress at the Hoffman House supper club, donning a uniform that, she has recalled several times since, included a red miniskirt with black fishnet stockings.

The determination that sprang from those humble beginnings stayed with Bartz as she began her career in the early 1970s, a time when corporate America often treated women with outright hostility. Undeterred, she did programming, sales, and marketing at 3M and Digital Equipment Corp., and eventually moved into upper management at Sun Microsystems, a scrappy young company she joined when it had about 100 employees and $9 million in revenue. Her co-workers quickly recognized her as someone with exacting standards - and a sharp tongue.

Venture capitalist Ray Rothrock recalls being on the receiving end of one such lashing when he was a 28-year-old business development manager at Sun. It was the mid-'80s, long before Silicon Valley's casual culture had solidified, and Rothrock had come to work without a tie. Bartz spotted Rothrock's attire and lit into him. "Ray Rothrock!" she snapped, loud enough for the entire department to hear over their cubicles. "You go home, and you put on your coat and your tie. I don't ever want to see you back here again not prepared to meet any customer who walks in that door." It was embarrassing, and effective - from that day forward, he says, everyone came prepared to do business at a moment's notice.

As CEO of Autodesk, she managed to succeed despite odds that were farcically stacked against her. When she arrived in 1992, sales growth had slowed and profits had fallen. She had to deal with a founder, John Walker, who had a penchant for sniping at the company's management, and with a band of programmers who bristled at her top-down style. As if that weren't enough, on her second day on the job she discovered she had breast cancer. Bartz had a radical mastectomy, made business calls from her hospital bed, and returned to work just four weeks later instead of the recommended six, a decision she has since said other women shouldn't emulate. "I didn't want people saying, 'There - women finally get to be CEOs and look what happens,'" she told the New York Times.

Eventually she silenced any doubters. Bartz transformed Autodesk through a series of smart acquisitions and by encouraging new product development. Autodesk's software and applications became must-have tools for designers and manufacturers alike, thanks to Bartz's insistence that the company methodically roll out new features based on customer feedback. Peers noticed. "Sometimes you get tech industry leaders who are either really great on making money or really great on technology but can't turn it into a great business," says Ann Livermore, a longtime Silicon Valley executive who leads enterprise technology at Hewlett-Packard. "Carol is very balanced between the two."

***

There's plenty for Bartz to tackle at Yahoo, starting with sprawl. David Filo and Jerry Yang's directory of websites weathered the dotcom bust, only to create bigger problems for itself. During a breakneck period of growth between 2003 and 2005, Yahoo expanded into areas such as online dating and job listings, while gobbling up Internet companies, including one called Overture that was the first to figure out a way for advertisers to pay for placement adjacent to online searches. But while Yahoo management was distracted by dealmaking and executive infighting, a crosstown rival, Google, emerged with an entire business essentially built around a technology similar to Overture's.

Google perfected paid search and eventually moved into new areas, such as online applications and maps. Yahoo, meanwhile, lurched from one strategy to the next: Under former CEO Terry Semel, a Hollywood veteran, the company tried to reinvent itself as a digital-media company, complete with original web content and an office in Santa Monica. Semel resigned in June 2007, and Yang stepped in as CEO. His big idea: to seize the lead from Google in search advertising. But Yang's reign, too, had an ignominious end. He was slow to consolidate redundant businesses (two photo sharing properties, multiple social-media sites) and failed to explain the strategy behind his Get Google objective. Sensing chaos at Yahoo, Microsoft CEO Steve Ballmer made the $45 billion bid for his rival, which Yang turned down, much to the dismay of investors. (Yahoo's market cap is about $18 billion today.)

Bartz has brought some much-needed decisiveness and order. She blew up Yang's confusing management structure and tried to impose rules. (She told employees she would "drop-kick to fucking Mars" anyone who disclosed unauthorized company information, a comment that was immediately leaked to the press and blogs.) And she is doing away with "abandoned products floating like debris in space" - Bartz's term of art for ideas that launched in good times, failed to impress, then limped along for years. Properties that fit the description end up on her imaginary Wall of Shame, a list of misfits that a strategy team will save, sell, or scrap. (Online data storage site Yahoo Briefcase and travel tool FareChase, among others, have already landed on the scrapheap.)

She also wants to prevent more space debris from launching in the future. "Yahoo was amateur hour in the past when it comes to product management," she bluntly told business partners last month; groups haphazardly released things without a clear sense of whether customers wanted them. From now on, she has promised, products will arrive on a schedule so that customers can offer feedback, with the best ideas appearing in the next version - a formula that worked well for her at Autodesk.

She's personally soliciting customer comments. Since February, Bartz has been on a listening tour with Yahoo's sales executives, huddling with chief marketing officers, newspaper CEOs, digital ad agency executives - even NBA commissioner David Stern - to find out how Yahoo can get more of their business in a down economy. At a recent series of meetings in New York, she eschewed PowerPoint slides, handed out her business card, took her own notes, and pressed for suggestions on how Yahoo can do better. "When you meet with her, she's very frank. She really doesn't blow smoke," says Nick Beil, CEO of search engine marketing firm Performics, a unit of Publicis Groupe. "I think if she's focused, she can make some pretty big improvements in a short period of time."

One short-term move she likely won't make: selling Yahoo. Bartz has told associates she isn't interested in hawking Yahoo or its search business to Microsoft or anyone else. It isn't that she dreams of overtaking Google, a coup she has privately said is unrealistic. Instead Bartz believes she can use Yahoo's second-place search position to revolutionize online advertising, and in the process restore Yahoo's status as a digital superstar.

If that seems equally unattainable, consider the state of online ads. The rectangular display ads that flash, dance, and wobble everywhere on the web aren't nearly as effective as they should be. The first challenge is targeting. Sites like Yahoo know how to put ads in obvious places - say, a Nissan Altima ad on Yahoo Autos, or an E*Trade ad on Yahoo Finance.

Ideally, though, car shoppers and investors would see those ads everywhere on Yahoo based on who they are, not just what they're doing. If Yahoo could find a way to deliver a luxury car ad to a high-income person in the market for a new vehicle while she's checking her e-mail, formerly low-rent ad space on Yahoo Mail could suddenly become valuable real estate. Similarly, advertisers might be willing to spend more on sites that can deliver a payoff: a store visit, a test drive, or a sale - outcomes that Yahoo today tracks poorly, if at all. Bartz is "going to be pushing her staff to think up ways that can be done," says Rob Norman, CEO of WPP's ad-buying giant, GroupM. "It's a matter of finding the measurable thing against which they can sell."

Not surprisingly, every other Internet site is deploying its best and brightest to come up with better ways to serve Madison Avenue. Facebook, for example, hopes to sell ads that target consumers based on user-generated content. Microsoft is getting set to unveil a new-and-improved search engine. It falls to Bartz to explain to advertisers (and employees and investors) what ultimately will distinguish the company from these competitors and others.

She's fallen short thus far, telling people in meetings that Yahoo is a "starting point on the web" that strives to "deliver 'wow' experiences." The rap sounds quite a bit like the script recited by executives of companies such as AOL (a unit of Fortune's parent, Time Warner), InfoSpace, and other web disappointments. Bartz needs to come up with a compelling plan - and a better way of explaining it - if she doesn't want Yahoo relegated to also-ran status.

Yahoo CEO Carol Bartz Drops the F-Bomb

Yahoo Search For New CEO Nears Close

As posted by: Wall Street Journal

Yahoo Inc. is in the final stretch of its search for a chief executive officer, and a decision could come as soon as next week, said people close to the Internet company.

Among candidates still under consideration is Carol Bartz, the former chief executive officer of Autodesk Inc., a publicly traded company that builds design software used in engineering also offering Autodesk Training. She's "on the list," said a person familiar with the matter, adding that she has impressed the Yahoo directors she has met so far.

A Yahoo spokesman declined to comment. An Autodesk spokeswoman said Ms. Bartz was traveling Thursday and couldn't be reached for comment. Her candidacy was first reported by the Web site AllThingsD.com, which is owned by Dow Jones & Co., publisher of The Wall Street Journal.

Whether Ms. Bartz is a backup candidate or a front-runner remains unclear. People familiar with the matter said the board is leaning toward an external pick at this phase, as it winds down a search it formally announced on Nov. 17. Former Vodafone Group PLC Chief Executive Arun Sarin, whom the Yahoo board had been seriously considering, has withdrawn his name, according to people familiar with the matter. Mr. Sarin didn't return requests for comment.

The board has yet to make an offer and is unlikely to before next week, said people close to the company. At the latest, Yahoo is hoping to announce a new leader before it reports fourth-quarter earnings at the end of the month, they said. Once Yahoo board members agree on a candidate, the company also will have to negotiate an employment agreement. That sometimes takes a few weeks.

Choosing Ms. Bartz, 60 years old, would indicate that Yahoo is looking for a steady hand who has run a public company over someone with Internet and online advertising experience. If the board heads in that direction, the company could also seek to hire another senior executive with more extensive consumer product experience, which analysts and investors argue Yahoo needs to better compete with Google Inc. and other rivals.

Ms. Bartz still serves as executive chairman of Autodesk, of San Rafael, Calif., which she ran as chief executive from 1992 to 2006. Autodesk is around half the size of Yahoo, with approximately 7,000 employees world-wide. In its fiscal year ended January 31, 2008, Autodesk reported $2.2 billion in revenue. Yahoo's revenue in its fiscal year ending December 2007 was $6.97 billion.

Ms. Bartz was also an executive at Sun Microsystems Inc. and she sits on the board of Cisco Systems Inc., with Yahoo's Chief Executive and co-founder Jerry Yang. She is also a member of the Intel Corp. board with Yahoo President Susan Decker.