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Yahoo CEO Carol Bartz gestured during her speech at the American Association of Advertising Agencies annual Media and Leadership Conference in San Francisco, California March 1, 2010.
Credit: Reuters/Robert Galbraith
By Alexei Oreskovic and Edwin Chan
SAN FRANCISCO |
Wed Sep 7, 2011 3:10pm EDT
SAN FRANCISCO (Reuters) - Yahoo Inc Chairman Roy Bostock fired CEO Carol Bartz over the phone on Tuesday, ending a tumultuous tenure marked by stagnation and a rift with Chinese partner Alibaba.
Chief Financial Officer Tim Morse will step in as interim CEO, and the company will search for a permanent leader to spearhead a battle in online advertising and content with rivals Google Inc and Facebook.
Shares in Yahoo jumped 6 percent in after-hours trading to $13.7 after closing at $12.90 on the Nasdaq. They are scarcely higher than where they were when Bartz first took the reins in January 2009 with hopes of reviving stalled growth and competing with up-and-coming rivals.
On Tuesday, her efforts were abruptly halted after Bostock called with the bad news.
"I am very sad to tell you that I've just been fired over the phone by Yahoo's Chairman of the Board. It has been my pleasure to work with all of you and I wish you only the best going forward," the outspoken CEO said in a two-sentence email to employees obtained by Reuters.
The turn of events surprised few Wall Street observers who had tracked a rising torrent of criticism and watched revenue growth falter and sputter out.
Some analysts said Bartz's departure signaled the company had run out of options after failing to dominate the advertising and content markets and handing over its search operations to Microsoft Corp.
That partnership, under which Microsoft handles search for Yahoo's websites and keeps a portion of ad revenue, appears to favor the software company at Yahoo's expense.
STRATEGIC REVIEW
Yahoo is still one of the most popular destinations on the Internet but faces increasing competition from social networking service Facebook and from Google, which has a market value of $170 billion, 10 times more than Yahoo.
Yahoo said a new executive leadership council would help Morse in managing day-to-day operations as well as supporting "a comprehensive strategic review" to position the company for growth.
The decision to oust Bartz was reached by an unanimous vote of Yahoo's eight independent directors late last week, according to a person close to the company. Bartz, and co-founder Jerry Yang, who are also on the board, did not participate in the vote, the person said.
Yahoo has not hired investment banking advisors, but was likely to meet with various firms in the coming weeks, according to the person close to the company.
"It's hard to say what direction they are going to head. What is the next step for Yahoo? They went down the road of search, they went down the road of media, becoming a content company, they went down the road of advertising," said YCMNet Advisors CEO Michael Yoshikami.
"I'm not sure where they go right now. One wonders if this means that they might be ripe for a takeover."
At least three private equity firms had reached out to at least one media firm to gauge acquisition interest two weeks ago, said a second source with direct knowledge of the approaches who declined to be identified because the talks were preliminary.
CROWN JEWELS
Yahoo is worth about $16 billion, with much of that ascribed to its roughly 40 percent stake in China's Alibaba, the parent company of websites including Alibaba.com and Taobao. Yahoo also owns a stake in Yahoo Japan, along with Japanese mobile company Softbank.
Analysts estimate Yahoo's Asian assets are worth about $7-$9 of Yahoo's roughly $13 share price, based on a sum-of-the-parts valuation.
Relations between Yahoo and Alibaba have soured since Bartz took over, with Alibaba founder Jack Ma failing in an attempt to buy out its U.S. partner's stake.
A senior official at Alibaba Group said Bartz's departure was unlikely to solve the ownership issues.
"There won't be much of an impact in the relationship to be honest," the official said on the condition of anonymity. "We have to wait and see till we are working together with the new CEO."
The rocky relationship between the companies came to a head in May when it was revealed that Alibaba had abruptly handed Alipay -- one of Alibaba's crown jewels -- to a company controlled by Ma, apparently without Yahoo's knowledge.
"The immediate impact will not be much because I don't think Yahoo wants to sell its stake although Alibaba wants to buy it. It really depends on how Tim handles this, as in the past Carol has had a strong stance on this," said Hong Kong-based CLSA analyst Elinor Leung.
FALL FROM GRACE
Bostock voiced his public support in June for Bartz, a lightning rod for criticism from Wall Street, and known for her tough attitude and salty language.
Bartz's ouster capped a decade-long fall from grace for a company whose shares traded at more than $125 in January 2000 during the dotcom bubble -- but now languishes at about a 10th of that level.
Bartz arrived at Yahoo in January 2009 after a strong showing at software giant Autodesk with high hopes of turning around Yahoo, after Yang was widely thought to have botched a $47.5 billion proposed takeover by Microsoft, rebuffing that advance as too low.
Yahoo reported a slight decline in net revenue in the second quarter, as efforts to restructure its sales force caused disruptions.
Research firm eMarketer has projected that Facebook would overtake Yahoo this year to collect the biggest slice of online display advertising dollars in the United States.
Bartz, who had more than a year left on her four-year contract with Yahoo, was slated to host a Q&A at the Citi Technology Conference at 1250 pm ET in New York on Wednesday.
Bartz had reserved a room at the St. Regis hotel in Manhattan for Tuesday evening, but a hotel receptionist reached over the phone said the booking had been canceled.
(Additional reporting by Melanie Lee in SHANGHAI; Poornima Gupta and Sarah McBride in SAN FRANCISCO, Jennifer Saba in NEW YORK and Bill Rigby in SEATTLE; Writing by Edwin Chan; Editing by Carol Bishopric and Anshuman Daga)
original content on reuters
SAN FRANCISCO – Yahoo's stock rose nearly 5 percent on Wednesday after the company fired its CEO following more than 2 1/2 years of financial lethargy.
Tuesday's ouster came as investors were convinced that Carol Bartz couldn't steer the Internet company to a long-promised turnaround.
To fill the void, Yahoo's board named Tim Morse, its chief financial officer, as interim CEO. Bartz, who became CEO in 2009, lured Morse away from computer chip maker Altera Corp. two years ago to help her cuts costs. Yahoo said it is looking for a permanent replacement.
Yahoo Chairman Roy Bostock, also a target of shareholder frustration, informed Bartz about the move over the phone, according to an e-mail the outgoing CEO sent from her iPad that was obtained by the All Things D technology blog. The blog first reported Bartz's ouster.
Yahoo didn't return requests for comment Tuesday and Wednesday.
Bartz's rude dismissal "made you feel a little bit like you were watching some reality TV show," Forrester Research analyst Shar VanBoskirk said Wednesday.
Macquarie Securities analyst Ben Schachter said the handling of Bartz's departure was unseemly and a sign of even more drama to come at Yahoo.
In a research note late Tuesday, Schachter predicted there will be a wide range of conjecture about Yahoo's future, with the most likely speculation centering on Yahoo as a takeover target during a vulnerable time.
Alternatively, Yahoo could make a bold move itself by trying to buy the online video site Hulu.com, which is already talking to suitors, or trying to sell its 43 percent stake in the Alibaba Group, one of China's most prized Internet companies. Bartz's tense relationship with Alibaba CEO Jack Ma had fed investor dissatisfaction about her leadership.
Youssef Squali at Jefferies & Co. said that the Internet company's challenges, and the fact that Bartz was Yahoo's third CEO in four years, will make it tough for the board to find an "A player" for the job.
Squali said Yahoo could be sold to a large media company like News Corp. or be bought by some sort of consortium that could feature Microsoft Corp. or AOL Inc.
"In all, we believe that it is more likely that the board reaches an agreement to sell the company or parts of the company before a new CEO is found," Squali wrote Wednesday.
In a statement Tuesday, Yahoo said it is undergoing a "comprehensive strategic review" in its latest effort to give investors a reason to buy its stock, but the company didn't offer details.
Bartz, 63, led an austerity campaign helped boost Yahoo's earnings, but the company didn't increase its revenue even as the Internet ad market grew at a rapid clip.
The financial funk, along with recent setbacks in Yahoo's online search partnership with Microsoft Corp. and the Alibaba investment, proved to be Bartz's downfall. Her ouster comes with 16 months left on a four-year contract that she signed in January 2009.
That contract entitles her to severance payments that could be two to three times her annual salary and bonus, along with stock incentives she received during her tenure. Bartz received a $2.2 million bonus to supplement her $1 million salary last year.
Yahoo has now replaced three CEOs in a little over four years. During that time, Yahoo has lost ground in the Internet ad race to online search leader Google Inc. and Facebook even though its website remains among the world's most popular.
Known for her no-nonsense leadership and sometimes gruff language, Bartz arrived at Yahoo as a respected Silicon Valley executive who had won praise for turning around business software maker Autodesk Inc. But she had no previous experience in Internet advertising, the main way Yahoo makes money.
That hole in her resume immediately raised questions whether she was qualified for the job, and those doubts only escalated as Yahoo's revenue continued to sag.
At first, Bartz blamed bad timing; she started the job during some of the bleakest months of the Great Recession. Later, she would say that she inherited such as mess from her two predecessors, Yahoo co-founder Jerry Yang and former movie studio boss Terry Semel, and that it would take time to get Yahoo back on the right track.
At one point, she even compared her challenge to those that faced Steve Jobs when he returned to Apple Inc. as CEO in 1997.
Unlike Jobs, Bartz never was able to articulate a strategy to win over investors.
"She focused on plugging holes in the ship instead of turning it around," said Gartner Inc. analyst Ray Valdes.
The disappointing performance was reflected in Yahoo's stock price, which closed Tuesday at $12.91. That's 81 cents, or 7 percent, higher than where Yahoo shares stood when Bartz was hired as CEO. During the same period, Google's stock price has risen by more than $200, or 66 percent, and the technology-driven Nasdaq composite index has climbed by 60 percent. A group of investors led by Goldman Sachs Group concluded privately held Facebook is worth $50 billion in an appraisal done earlier this year. That's triple Yahoo's current market value.
Bartz never hit any of the price targets that the board set for her when she was hired. That means none of the 5 million stock options that she received upon signing her contract had vested by the time she was ushered out the door.
Investors seemed happy to see Bartz go. On Wednesday, the Sunnyvale-based company's stock rose 61 cents, or 4.7 percent, to $13.52.
Although Bartz's exit as CEO came suddenly, her departure isn't a shock. The pressure to replace her grew earlier this year after Bartz acknowledged Yahoo's search partnership with Microsoft wasn't producing as much revenue as the companies anticipated.
Then, in May, Yahoo stunned investors by disclosing that Alibaba had spun off an online payment service in a move that threatened to diminish the value of Yahoo's investment in the Chinese company.
Alipay in July agreed to a complex settlement that could eventually be worth more than $1 billion to Yahoo, but there were too many uncertainties in the deal to placate shareholders.
Bostock had steadfastly stood behind Bartz whenever she was attacked by investors or analysts. In a Tuesday statement, Bostock thanked Bartz for "her service to Yahoo during a critical time of transition in the company's history" without providing an explanation for why the board decided to replace her.
BGC partners analyst Colin Gillis said Yahoo's board "has got to look in the mirror here."
"Swapping the CEO without swapping the (board) chair doesn't solve your problem," he said. "The person that hired Carol to begin with deserves to share the culpability."
To help Morse, Yahoo set up an "executive leadership council" that includes some of the executives that Bartz recruited, including the company's products guru Blake Irving and the head of its North American operations, Ross Levinsohn. While he worked for News Corp., Levinsohn helped put together the Hulu video site and is seen as a possible CEO candidate.
Analysts also have speculated that David Kenny, an Internet veteran who joined Yahoo's board in April, might be a candidate for Yahoo's CEO job. Kenny is currently president of Internet networking services provider Akamai Technologies Inc.
With its stock sagging and its management in limbo, Yahoo could be more vulnerable to a takeover attempt by a private equity group or another opportunistic bidder attracted to what remains one of the Internet's best-known brands. Microsoft offered to buy Yahoo for $47.5 billion, or $33 per share, in 2008 only to be rebuffed.
___
AP Technology Writers Rachel Metz in San Francisco and Ryan Nakashima in Los Angeles contributed to this story.
original content on yahoo
Amazon.com President, Chief Executive and Chairman Jeffrey Bezos speaks with employers and attendees at the Consumer Reports headquarters in Yonkers, New York, May 11, 2011.
Credit: Reuters/Mike Segar
LOS ANGELES |
Fri Sep 2, 2011 7:04pm EDT
LOS ANGELES (Reuters) - Amazon.com Inc plans to unveil a cheaper, smaller $250 rival to Apple Inc's iPad tablet device in November, industry blog TechCrunch reported on Friday.
Sporting a back-lit 7-inch screen -- smaller than the iPad's and about the same as Research in Motion's PlayBook -- the device is geared toward playing music and movies off the Internet, the tech blog reported.
TechCrunch, which said it had played with a testing prototype, reported that the plan was for Amazon to offer Amazon Prime -- its $79-a-year Internet streaming service -- for free along with the gadget. It did not cite any sources.
Amazon did not respond to requests for comment.
The Internet retailer's first entry in the tablet computing arena -- its Kindle functions more like an electronic-book reader -- has been touted as a strong contender to Apple, whose cheapest tablet goes for $499.
Motorola and Samsung have only chipped away at Apple's commanding three-quarter share of the market, while Hewlett Packard threw in the towel by announcing it will kill off its TouchPad after a final production run. This week, Sony Corp leapt into the field with its own poorly reviewed device.
Analysts have been upbeat on Amazon's gadget, particularly if it beats the iPad on price. It may sell as many as 5 million tablets in the fourth quarter, becoming the top rival to Apple, Forrester Research estimates.
Apple sells between 7 to 9 million tablets a quarter.
The upcoming tablet, running an operating system developed from an older version of Google Inc's Android software, will be Wi-Fi only and come with a color touchscreen but a limited 6GB of memory, according to the blog.
TechCrunch said that was because the device is geared toward playing content off the cloud or Internet, rather than the gadget itself. The tablet's main screen features a carousel that spins between a book-reader, a music player, movie player and other applications.
A 10-inch version may arrive 2012 if the 7-inch device sells well, the blog added without citing a source.
(Reporting by Edwin Chan; editing by Carol Bishopric)
original content on reuters
