Yahoo
“It was a little tougher internally than I think I had anticipated,” Bartz, 61, said in an interview at Yahoos 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 Yahoos 15-year-old site relevant in an era of Twitter and Facebook. Yahoos sales have fallen for four straight quarters, and its stock trailed the Nasdaq Composite Index in the past year. Bartz expects Yahoos 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 shes put in place — well know in the next year or two really whether it pays off. I think at this point its 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.”
The CEO of Autodesk Inc. from 1992 to 2006, Bartz took the reins at Yahoo from the companys 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 Microsofts 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.
Yahoo fell 47 cents to $16.70 yesterday in Nasdaq Stock Market trading. The shares climbed 38 percent in 2009, a year in which Googles stock more than doubled and the Nasdaq Composite Index advanced 44 percent. Yahoos stock tumbled 48 percent in 2008, when the Microsoft acquisition talks fizzled.
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 arent surprising, given the recession and a broader slowdown in advertising, she said.
No Apology
“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. Im 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 thats acceptable,” Munster said.