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Struggling Yahoo fires its chief executive

Asset sales to be studied as share of ad market falls

By Verne G. Kopytoff
New York Times / September 7, 2011

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SAN FRANCISCO - Carol A. Bartz, Yahoo’s chief executive, was fired yesterday, ending a rocky two-year tenure in which she tried to revitalize the online media and search company.

In an e-mail to employees titled “Goodbye,’’ Bartz wrote:

“I am very sad to tell you that I’ve just been fired over the phone by Yahoo’s chairman of the board.’’

She said, “It has been my pleasure to work with all of you and I wish you only the best going forward.’’

Bartz has been under pressure from her first day on the job to turn the company around, and in recent months, the pressure from major investors has intensified.

The company remains adrift, despite management team shuffles, layoffs, and the shedding of underperforming services. Bartz engineered a deal that turned over its search operations to Microsoft, but that has also failed to live up to expectations.

Timothy Morse, the company’s chief financial officer, will serve as interim chief executive.

Yahoo also said that it has started a strategic review of the company’s options, including a possible divestment of its Asian holdings. It cautioned that no decisions had yet been made.

The company also said its directors named five other senior Yahoo executives to an executive leadership council that is supposed to help Morse manage the company.

Investors have long tried to pressure Yahoo to sell itself, or at least sell major pieces of the company. Yahoo rejected a buyout offer from Microsoft in 2008.

Bartz joined Yahoo in January 2009 after investors became dissatisfied with the stagnant growth and indirection under its previous chief, Jerry Yang, a cofounder of the company.

Her hiring was initially met with optimism by Wall Street, which saw her as a tough-talking savior who could kick the company into shape.

But online advertising revenue at the company remains flat even though the advertising market is growing quickly.

Although Yahoo draws one of the largest audiences anywhere on the Web - more than 600 million unique visitors to all its services, including its search page and its media sites like news, finance and sports - it has been unable to significantly increase its advertising revenue.

Yahoo’s share of display advertising in the United States, which is supposedly the company’s strength, is expected to decline 13.1 percent this year after having fallen 14.4 percent in 2010, according to estimates from eMarketer, a digital marketing research firm.

Meanwhile, Facebook is expected to gain market share.

Roy Bostock, Yahoo’s chairman, said in a statement released last night:

“We are committed to exploring and evaluating possibilities and opportunities that will put Yahoo on a trajectory for growth and innovation and deliver value to shareholders.’’

Criticism of the management of the company has also been directed at Bostock and the directors.

Colin W. Gillis, an analyst with BGC Partners, said the board should share some of the responsibility for Yahoo’s stagnation and itself should be replaced.

“The board needs to look in the mirror,’’ he said. “Where’s the board’s culpability in this?’’

“Are they going to seek a replacement,’’ he asked, “or is Tim just going to be tasked with carving the company up?’’