Yahoo CEO Carol Bartz Fired by Phone

With more than a year to go on her contract, Yahoo CEO Carol Bartz received a phone call on Tuesday from Yahoo chairman of the board Roy Bostock firing her from her position. While Bartz was officially fired “without cause,” analysts point to communication issues and mishandling of Yahoo’s assets as reasons the executive was let go.

Hired in 2009, Bartz’s goals included growing Yahoo’s share of the search market, or at least halting its decline against rival search engine Google; growing Yahoo’s revenues; and managing Yahoo’s Asian assets, including its 43 percent stake in Alibaba. With Yahoo’s stock surging soon after news of her dismissal, it’s clear that she has failed on all three counts. Still, it would have taken someone with the genius of Steve Jobs to turn the besieged Internet company around.

The nail in the coffin may have been the fatal miscommunication over Alibaba’s ownership of Chinese electronic payment company Alipay. Perhaps “lack of communication” is a more correct characterization. In August of last year, Alibaba Group sold Alipay to Jack Ma, Alibaba’s founder, chairman and CEO. Many observers saw Alipay as a huge factor in Alibaba’s and Yahoo’s value. Alibaba did not see fit to inform Yahoo of this change in ownership until quite some time later, however.

Indeed, Alibaba Group waited until March 31 to inform Yahoo of the sale. But here’s the problem: Bartz compounded the communications issue by not informing their stockholders of the sale at the company’s earnings call three weeks later, in late April. In fact, news of the sale didn’t hit the press until several weeks later, in mid-May. This is not how a leader takes responsibility for a problem.

Bartz also failed to achieve her other goals. According to David Angotti, writing for Search Engine Journal, with Bartz at the helm, “Yahoo has continued to lose market share to Google and Facebook” and “has not been able to produce acceptable advertising revenues for stakeholders.” Yahoo CFO Tim Morse will be stepping in as interim CEO in the face of Bartz’s departure.  Adding insult to injury, Yahoo’s stock rose more than eight percent on the news that Bartz was fired.

So where will Yahoo go from here? Jordan Rohan, an analyst at Stifel Nicolaus & Co. in New York, thinks “the Yahoo board of directors may be more receptive to a deal now than it has been in the past.” The big question, then, is who will buy it. Microsoft seems to be one candidate, but a media company such as News Corp. might be a much better fit. Some observers expect this sale to happen before a new, permanent CEO is found.

There’s no telling how quickly a sale will happen, but Kara Swisher cited sources close to Yahoo as saying the company is preparing to hire investment bankers and other strategic advisory firms as it tries to figure out what to do next. Ideas on the table likely include “possible acquisitions, shedding units, bringing in new investment partners and even taking the company private or selling it,” according to Swisher.

Other high-tech companies have gone through a long downward spiral and come back stronger – but the last notable time it happened, it happened to Apple, and it took Steve Jobs to turn it around. He’s not available. And even if he was, he wouldn’t be the right person anyway. As Henry Blodget notes in a piece for Business Insider, Yahoo “is now a media, content, and communications company.” It needs to hire someone who understands that and knows how to make magic with it. Sadly, that seems unlikely to happen, though rumors are circulating that AOL may be interested in acquiring Yahoo. We’ll have to wait and see.  

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