She has guts and character and should be CEO somewhere. Just not Yahoo.
But Carol Bartz deserves better treatment than this, if the account of her dismissal is correct. “I’ve just been fired over the phone by Yahoo’s Chairman of the Board”, she claims in an email sent to Yahoo employees. I believe it. This stinks of boardroom coup.
Still, I’m not surprised at Bartz’s sacking — more that it didn’t come sooner. In a scathing January 2009 commentary, I expressed strong misgivings about Bartz then becoming CEO, writing: “The media company is finished” and Bartz’s “credentials are all wrong for Yahoo”. More:
“Yahoo is a consumer media company, but Carol is all enterprise cred. She led Autodesk and worked for both Digital Equipment Corporation and Sun Microsystems. DEC might as well be a segment on the VH1 show ‘Where Are They Now?’…Sure, Autodesk is successful, but in a specialized, niche market. Going from Autodesk to Yahoo would be like changing from governor of Rhode Island to president of the United States”.
She quickly started remodeling Yahoo, cutting people and properties, which set off an exodus of hugely talented executives. In a stunning February 2009 reorganization, Bartz literally destroyed the technology and product division line of Yahoo. Among the many firings: CFO Blake Jorgensen. She promised then: “Look for this company’s brand to kick ass again”.
That’s the opposite of what I warned a month earlier: “If Carol cuts up Yahoo, its brand value must diminish”.
The chop-shop activities continued well into Bartz’s second year as CEO. In March 2010, she dismantled Yahoo’s mobile group, a stunning move considering the enormous popularity of cell phones (5 billion subscribers globally at the time) and the huge potential to sell advertising and deliver rich-media content. Within a month, Apple launched iPad. I pleaded: “Would someone please take away the axe from that woman!”
In December 2010, Yahoo jettisoned 8 more web properties and identified nearly a dozen more as “sunset”. While chopping Yahoo to pieces, Bartz bolstered some media properties, such as the May 2010 acquisition of Associated Content for $100 million. But chopping Yahoo to pieces defined her time running the media company.
The greatest cut was by far the most long-term damaging to Yahoo, its media assets and brand. Bartz cut a deal with Microsoft CEO Steve Ballmer to outsource search. I later wrote: “Yahoo is little more than a beloved brand without search, particularly with CEO Carol Bartz dismantling the company’s other prized assets”.
Microsoft launched a $44-billion hostile takeover of Yahoo in early 2008, giving up a few months later. In May 2008, Ballmer expressed interest to acquire search only. I wrote:
“How stupid, or perhaps desperate, do Microsoft execs think is Yahoo’s board of directors? So let me try to understand: Yahoo wouldn’t sell the whole company, but it would give up crown jewel search? Seriously, are Microsoft execs totally psycho? Delusional? Definitely, Yahoo’s board would be nuts for taking this kind of deal…Yahoo is just going to let this crown jewel go? Yahoo started as a search company. Search is core to Yahoo’s business, strategic and technological identity”. I called the separation of search from Yahoo a “lobotomy”.
But stupid Bartz and Yahoo’s board were, by outsourcing search to Microsoft and in process giving up future research and development. Search isn’t just a hugely valuable asset because of what Yahoo was or what it could be — or could have been: The future of search is mobile, which Google and Microsoft understand so well. Bartz sold the media company’s future through the Microsoft search deal and mobile division reorganization. Microsoft and Yahoo announced the search outsourcing agreement in July 2009. Microsoft started serving up Yahoo search results in August 2010.
Recent financials hint at Bartz’s ouster. During second calendar quarter 2011, Yahoo revenue fell by 23 percent year over year, largely because of its search revenue-sharing agreement with Microsoft. Income rose by 9 percent. A quarter earlier revenue fell by 6 percent, but income by considerably more: 29 percent.
It looks like some investors are giddy about Bartz’s firing, which really should include the people doing the duty. Yahoo’s board brought on Bartz and sanctioned her chopping the company to pieces and making that lobotomizing deal with Microsoft; who holds them accountable? Yahoo shares are up more than 6 percent in after-hours trading this evening.
Photo Credit: Yodel Anecdotal/Yahoo Inc.