The fear and uncertainty that have nipped at the heels of Yahoo Inc. (Nasdaq: YHOO) for years finally caught up with the company this week. The board yesterday fired CEO Carol Bartz in the wake of a two-week review by the firm's independent directors, which revealed what we already knew: Yahoo is underperforming in a market it should be dominating.
It could be argued that firing Bartz wasn't necessary. But enterprise leaders would be justified in thinking that Yahoo's problems stem directly from the top. And that's where the force for real change must come for Yahoo if it indeed has any future as an independent company.
Despite a reputation as a tough cookie unafraid to lash out at critics, the 63-year-old Bartz has been shockingly out of touch with the realities of the market Yahoo plays in. Yesterday's Wall Street Journal gives the following critique:
Some people familiar with the situation at Yahoo contend she compounded long-term issues and frustrated fellow board members through missteps that included mismanaging Yahoo's U.S. ad-sales arm and failing to introduce innovative Web services, and at times didn't appear to have a solid grasp of parts of Yahoo's business. At a meeting with product managers in early 2010, according to one who was present, she said she didn't realize the majority of Yahoo's space for graphical ads resided in its communications services, namely, Yahoo Mail.
It's not the first time Bartz has been accused of being asleep at the switch. In a recent blog here, ThinkerNetter Ron Miller noted that Yahoo is the second most-visited site behind Google, and its failure to parlay its enormous traffic volume into ad dollars can be laid directly at management's door:
Yahoo continues to sell ads in the same way they were sold in the pre-digital age -- with ad sales people selling ads at a premium cost. If those ads don't sell -- and they haven't sold very much -- they go to an ad exchange where they are dumped at a much lower rate...
Does this sound familiar? It should, because it sounds to me like the print newspaper business... but Yahoo is not a print property and never has been. Why would it behave like one and continue to do so in the face of abject failure?
It's probably a question only CEO Carol Bartz can answer...
Bartz may have been out of touch with the revenue model for Yahoo, but there were other problems as well. Some accused her of focusing too much on the Asian markets, where Yahoo was buffeted by the actions of Chinese partner Alibaba, even as she seemed to ignore the threat posed to Yahoo by Facebook. (Notably, Bartz's departure may not help the ongoing stress in the Yahoo/Alibaba relationship.)
Other observers, such as CIMI Corp. CEO Tom Nolle, think Bartz failed to get Yahoo out of the "startup culture" that had dogged the company since ex-CEO Jerry Yang notoriously rebuffed a $5 billion acquisition offer from Microsoft in 2008. The company needed to reposition itself as a global player instead of a sassy and immature Silicon Valley upstart.
Firing Bartz may indicate that Yahoo is finally ready for the changes needed to make it in today's Internet environment. In a press release yesterday, the company's board describes the establishment of an Executive Leadership Council, which will work with interim CEO Timothy Morse (who was formerly EVP and CFO) until a permanent CEO is found. The board also will undertake a "comprehensive strategic review that the Board has initiated to position the Company for future growth."
It is commonly thought that Yahoo's strategic review could result in a merger or sale. But at least one writer thinks it unlikely that anyone will buy Yahoo outright. Shira Ovide of Deal Journal said it well in a blog today:
Yahoo is at least two different companies: A giant publisher of insanely popular websites such as Yahoo News, Yahoo Finance and Yahoo Sports. And a giant advertising company that sells those graphical display ads all over the Internet.
Can you tease out those two halves of Yahoo, sell those valuable stakes in Asian Internet companies, sell the publishing side to a media company and the advertising side to an ad or Internet company? Yeah, probably... None of it will make much sense. In short, good luck, Yahoo.
Please join us here for an Executive Clan chat to discuss this topic on Monday, September 12, at 1:00 p.m. ET.
I've always believed that Jerry Yang made an awful mistake in acting too big for his britches about the Microsoft deal. That action indicated to me that Yahoo's management was off the mark. When Carol Bartz took the helm, there was hope that somehow she'd get the company on a fast track that would justify the Microsoft turn-down.
But as it happened, the board wasn't doing its homework. Bartz didn't have the Web experience to take over Yahoo. Three years later, Yahoo is becoming a "don't do this" case study for the business texts.
And no, at this point, I also do not see Yahoo being sold in one piece.
What a disaster and what a shame that Yahoo didn't accept that bid from Microsoft when it had the chance. It will never see an offer like that again, that's for sure.
I tend to agree with the last bit of your blog, that Yahoo could potentially be sold in parts. I can't imagine anyone acquiring the company as is. As for going forward and thriving as an independent company, well, I wouldn't place my bet in its favor.
The ThinkerNet does not reflect the views of TechWeb. The ThinkerNet is an informal means of communication to members and visitors of the Internet Evolution site. Individual authors are chosen by Internet Evolution to blog. Neither Internet Evolution nor TechWeb assume responsibility for comments, claims, or opinions made by authors and ThinkerNet bloggers. They are no substitute for your own research and should not be relied upon for trading or any other purpose.
As competition for top technical talent heats up, savvy hiring managers and CIOs are beefing up their internship programs to ensure they build strong relationships with the next generation of IT talent. One surefire way to attract the brightest new minds: Pay them well.
There's good news for IT professionals seeking new jobs: The employment market is looking up, with more companies hiring technology professionals or paying more to retain them.
Looking to improve medical results and enhance collaboration with developers, Kaiser Permanente released its first application programming interface (API) this week.
The media circus -- social and traditional -- will descend on central Florida next month, as lawyers, pundits, and the merely curious follow the state's second degree murder case against George Zimmerman in the death of Trayvon Martin.
Almost everyone agrees that data analytics, digital marketing, apps, and APIs will greatly affect their enterprise's results in the next 12 months. But a report suggests that not all large corporations are moving quickly to adopt these enabling technologies -- and that could seriously harm their profitability, customer satisfaction, and chances for ongoing success.
Yahoo's new CEO can't go back to what Yahoo was; that's how it got to what it is! Instead she has to look at something that Yahoo has always rejected, which is a relationship with the telcos and cablecos. They'd love a partner in creating service applications.
Yahoo's problems may be due to bad management in part, but they're also due to the fad nature of online advertising. It's easy to make costly mistakes here. Google and Facebook should beware.
Google's replacement of CEO Schmidt by founder Page has a lot of Valley types agog with expectations of a renewed 'startup' mindset. But the Google of today can't be a startup, and it may well be that chasing the next Internet fad is the wrong approach for the company.
What can users today do to protect their online privacy? The simplest and most obvious option is to not use the Internet – at all. However, once all digital information is consolidated over the Internet, trying to protect digital identity by simply unplugging from the Internet becomes impossible – a fact that has manifest implications for civil liberties, Saunders says.
By 2011 the number of Internet-connected sensors will exceed 1 trillion, making your chances of doing anything or going anywhere unnoticed pretty much zero. Saunders talks about how the 'sensortization' of the Internet is eliminating the traditional divide between online and offline populations.
The 20th Century Internet was characterized by the ability to interact with other people and information on the Internet largely without anyone knowing who you were. The Internet of this century, conversely, will be defined by identity. Saunders explains how Internet users are unwittingly contributing to the demise of the anonymous Internet.
Steve Saunders talks about the risks inherent in uncontrolled, widespread profiling of Internet users, and how one day this practice could form the basis of a new industry, the Outernet, which in economic terms will have outgrown the commercial value of the Internet itself.
Search companies and social networks are collecting incredibly detailed information about their users, says Steve Saunders, who predicts that these 'profiles' could one day become commodities to be bought and sold by companies on 'profile markets' or 'identity exchanges’ – the digital DNA equivalents of the financial and commodities exchanges on which stocks, oil, and gold are traded.
Big-data and analytics tools enable marketers to understand customers as individuals, identifying unmet needs and addressing each customer as a "segment of one," says John Kennedy, VP corporate marketing, IBM.
New York's Metropolitan Transit Authority is conducting a pilot test of digital kiosks to guide subway users to where they want to go more efficiently and at lower cost.
The whole Amazon.reader debate is a double-stupid. It's stupid to think that there's any e-book buyer who doesn't know Amazon's URL, and it was stupider to let ICANN launch the whole free-form TLD initiative to start with.
While NFC's original goal was to enhance mobile commerce applications, it is finding its way into a number of other uses, which is creating both opportunity as well as challenges for IT departments.
Enterprises would like to move to cloud computing but are hesitant because they are concerned about providers’ ability to secure company data. Here are some tips that help to ensure that if breaches occur, the business is not left holding the bag.
Edmunds separates customers into segments based on the info it collects on its site and from partners, and uses that to push out custom content, said Brian Baron, director of business analytics for Edmunds.com, at Predictive Analytics Innovation Summit.
The IBM Smarter Commerce Global Summit in Monaco kicked into high gear today, and we've already begun to see news emerging from that lovely city-state by the sea.
Expert Integrated Systems: Changing the Experience & Economics of IT In this e-book, we take an in-depth look at these expert integrated systems -- what they are, how they work, and how they have the potential to help CIOs achieve dramatic savings while restoring IT's role as business innovator. READ THIS eBOOK
your weekly update of news, analysis, and
opinion from Internet Evolution - FREE! REGISTER HERE
Wanted! Site Moderators Internet Evolution is looking for a handful of readers to help moderate the message boards on our site – as well as engaging in high-IQ conversation with the industry mavens on our thinkerNet blogosphere. The job comes with various perks, bags of kudos, and GIANT bragging rights. Interested?
To save this item to your list of favorite Internet Evolution content so you can find it later in your Profile page, click the "Save It" button next to the item.
Email This
