With its brand slipping, the board of directors at Yahoo! decided to take action and fired Carol Bartz after less than two years as CEO. The question now is how does Yahoo! regroup to get back in the game and challenge Google?
Bartz told staffers she got the surprising news by phone. CFO Tim Morse was named interim CEO and the board appointed an Executive Leadership Council to support Morse in day-to-day operations until a permanent CEO is named.
“Given continued share losses in both display and search over the past few years, we are not surprised by this announcement; however, we note that this transition is likely to prolong Yahoo!’s turnaround in an Internet environment that is rapidly changing,” said Barclays Capital analyst Anthony DiClemente in a note to clients.
“As a result of the CEO transition, we see three different scenarios as increasingly likely: 1) Internal Hire: If the Executive Leadership Council can further focus Yahoo! on content, engagement, and monetization, we believe an internal candidate could narrow the turn-around timeframe; 2) External Hire: This could significantly extend the timeframe needed for Yahoo! to regain Internet advertising share, but it could also bring a fresh new start for the company; or 3) Potential asset sales and/or transaction: We believe Yahoo! is increasingly receptive to some type of financial engineering, including monetization alternatives of its Asian assets and/or potentially aligning itself with other large portal players. The latter of which would add to the scale needed to effectively take advantage of the secular shift in advertising to online and better compete with Google, Facebook, and other newer Internet models,” DiClemente wrote.
“Regardless, we believe this leadership change extends Yahoo!’s turnaround timeframe and could further destabilize its sales force – which is also going through a transition-lead to more employee departures, and accelerate its share losses in display. We would expect YHOO to continue working with MSFT to close the Revenue-per-Search gap, but this might also lose some focus and we note the RPS guarantee is set to expire in 1Q 2012,” the analyst said.
RBR-TVBR observation: Yahoo! is well off its all-time high of $108 and change in late 1999, most recently trading down in the teens. But the challenge for the next CEO is to counter the perception that Yahoo! is a brand from the past in the fast-moving online world and make it pop again. Or, as reported by the Wall Street Journal, another possibility is that the company will simply be sold if someone makes a decent bid. How the once-mighty have fallen.
