Posted by: Rob Hof on January 13, 2009
UPDATED: After a two-month search for a new CEO to replace cofounder Jerry Yang, Yahoo has chosen Autodesk Executive Chairman Carol Bartz to get the embattled company back on track. (Full release after the jump. I’m also liveblogging the conference call on the announcement. And here is my follow-up story on what smart folks think Bartz will need to do to turn Yahoo around.)
The appointment of Bartz, initially broken by the Wall Street Journal and Boomtown’s Kara Swisher after Kara first reported last week that Bartz was a strong candidate likely to be the top pick, was confirmed by Yahoo shortly after the stock market close today. Yahoo President Sue Decker, who had been a strong internal candidate and ally of Yang, is leaving. Yang will remain in his former longtime strategy-setting role as Chief Yahoo.
By picking an outsider, Yahoo clearly intends to bring some new thinking into the company. Here’s what Yahoo Chairman Roy Bostock said in a statement:
“She is the exact combination of seasoned technology executive and savvy leader that the Board was looking for, and we are thrilled to have attracted such a world-class talent to Yahoo!. She is admired in the Valley as well as on Wall Street for her deep management expertise, strong customer orientation, excellent people skills, and firm understanding of the challenges facing our industry. Carol meets all of the criteria we set for the search and is the only person to whom we offered the job. The Board is united in its view that her energetic and decisive leadership style, coupled with a proven track record of driving growth, operational excellence and shareholder value, is exactly what Yahoo! needs to get back on a path toward achieving its full potential.”
It has been nearly a year since Microsoft launched an unsolicited $31-a-share bid for Yahoo, which the Internet icon repeatedly rejected to investors’ dismay. Yahoo’s stock, which stood at about $20 a share a year ago, had dropped to around $12 in recent months. Even after the Bartz news was reported this morning Pacific time, Yahoo’s stock was down a fraction on a relatively flat day so far for the overall market (though it was rising after-hours 2% to 3%).
The seeming lack of confidence may be surprising, since the CEO pick was a big uncertainty for the company. What’s more, by many accounts, Bartz is a strong leader of the kind Yahoo clearly can use.
But investors hate uncertainty, and for now, that’s what Bartz’s appointment brings. Her age (60) and the fact that she stepped back from the CEO job at Autodesk awhile ago could indicate to some that she’s not likely to be a longtimer at Yahoo, which leads some such as TechCrunch to speculate she’s dressing Yahoo up for a sale of part or all of the business.
But with Microsoft playing hard-to-get lately, and perennial rumors of a Yahoo-AOL linkup never coming to anything, the prospects for investor-pleasing deals remain way up in the air. And some analysts doubt that Bartz came on merely to downsize or sell the company. “It makes a declarative statement that that they’re going to go it alone,” says Neil Sims, managing director at the executive search firm Boyden. “If the board wanted to sell off the company, there are others who would be more well-suited to do that.”
What’s more, a longtime colleague and friend thinks Bartz wouldn’t have taken the job with less than the five-year commitment required to turn the company around completely. “Carol doesn’t do anything for a short period of time,” says Bill Coleman, CEO of software firm Cassatt, who worked with and for Bartz at Sun Microsystems and appointed her to the board of BEA Systems when he was CEO there. He thinks she was ready a year and a half after leaving the Autodesk CEO spot to get back in the game.
One thing does seem clear from her appointment: Yahoo aims to continue its emphasis, begun when it appointed Yang CEO in mid-2007, of beefing up Yahoo’s technology chops. Bartz, after all, is a techie through and through, from her college degrees to the companies she worked at. “It’s a pretty clear sign of where Yahoo wants to go—which is to be a software company,” says Gartner analyst Allen Weiner.
A tech industry veteran who previously worked at Sun Microsystems and currently sits on the boards of Intel and Cisco, Bartz was CEO for 14 years at Autodesk, during which she is largely credited with diversifying the design-software firm’s products so it could grow to a billion-dollar company and cutting costs quickly during the 2001 tech downturn.
She’s also precisely the kind of CEO Yahoo sources said they were looking after Yang said he would be stepping down: a strong operational manager who has been a CEO at a midsize company, not so much a strategist and not necessarily someone with media or Internet experience.
Bartz will face many challenges, not the least of which is that very lack of experience in Yahoo’s core online media business. With no Internet media experience, Bartz may need a strong No. 2 who does know that fast-changing industry. Kara Swisher, in fact, hears that it’s likely she will appoint someone with just those credentials.
Bartz also must contend with a Microsoft that continues to loom in the shadows. Despite the software giant’s repeated vows that it’s not interested in a full buyout of Yahoo, CEO Steve Ballmer has continually hinted that he might be interested in a search deal of some kind, which Yahoo also rejected last year. And a new CEO who isn’t closely tied to a cofounder like Yang (despite her serving on Intel’s board with him) would suggest a new chance for Microsoft to come back with an offer.
Whichever path Bartz chooses, presumably with the board’s backing, she seems likely to be decisive—a quality sorely lacking in Yahoo’s top management in recent years. Bartz is a strong personality who seems unlikely to come on for a challenging task like this without feeling she can make a decisive change in Yahoo’s prospects. When I first met her at Sun Microsystems and talked to colleagues about her, she came off as someone who has no problems making decisions, even if that means everyone wouldn’t be happy with them.
I particularly remember one story by Sun colleagues who accompanied her on a sales call while she was pregnant. They recall cringing when a customer noticed she was pregnant and put a hand on her tummy; they thought she’d deck the guy. She didn’t, but the colleagues’ reaction was a clear indication that she’s a strong personality who will likely chart her own course. Surely Yahoo’s board knows this, and didn’t pick her simply to keep Yahoo following the same path.
Bartz only confirmed that impression with the rest of the world during a very short conference call today with analysts. When an analyst obliquely raised her lack of experience with the Internet or media, she shoved it out into the open with this response: “I think that’s a bunch of nonsense. I didn’t know CAD when I joined Autodesk. I have a little brainpower to figure out” how to deal with media. And when she was asked if she knows when she will announce her plans, she replied: “Let’s give this company some friggin’ breathing room.” OK!
The overriding question remains, however: Can anyone save Yahoo? Of course, this is a company that for all its troubles is still profitable and even growing, if nothing like rival Google. But with the economy hammering its mainstay display advertising, with Google and social networks continuing to steal away audiences, and with talent streaming out the doors, it’s not yet clear if Bartz can turn Yahoo around no matter how good she may be.
Here's the full release:'
Yahoo! Inc. (NASDAQ:YHOO), a leading global brand and one of the world's most trafficked Internet destinations, announced today that Carol Bartz, a veteran technology executive who was most recently Executive Chairman of Autodesk (NASDAQ: ADSK), has been named Chief Executive Officer and a member of the Board of Directors, effective immediately.
Prior to becoming Executive Chairman of Autodesk in 2006, Bartz, 60, led Autodesk as CEO for 14 years, transforming the company into a leader in computer-aided design software. During her tenure as CEO, revenues increased from less than $300 million to more than $1.5 billion, and the company's share price increased nearly ten-fold.
In addition to turning around Autodesk, Bartz's extensive executive experience includes hands-on responsibility for leading global operations, engineering, sales and marketing organizations for large technology and engineering companies including Sun Microsystems, Digital Equipment Corporation and 3M.
Roy Bostock, Chairman of the Board, said, "We are very excited to have Carol Bartz leading Yahoo! into its next era of growth. She is the exact combination of seasoned technology executive and savvy leader that the Board was looking for, and we are thrilled to have attracted such a world-class talent to Yahoo!. She is admired in the Valley as well as on Wall Street for her deep management expertise, strong customer orientation, excellent people skills, and firm understanding of the challenges facing our industry. Carol meets all of the criteria we set for the search and is the only person to whom we offered the job. The Board is united in its view that her energetic and decisive leadership style, coupled with a proven track record of driving growth, operational excellence and shareholder value, is exactly what Yahoo! needs to get back on a path toward achieving its full potential."
Bostock continued, "On behalf of the entire Board, I would like to thank Jerry Yang for acceding to our request 18 months ago to step into the CEO role. Jerry's unwavering enthusiasm for Yahoo!, his unique perspective on the company, and iconic stature in the industry make him an invaluable resource for the future. We are delighted that he plans to stay actively involved and are deeply grateful for his many contributions to the company's development over the years."
Carol Bartz said, "Yahoo! is a powerful global brand with a great collection of assets, strong technology, and enormously talented employees. The Company has accomplished a great deal in its relatively short history and I look forward to working together to take it to the next level. There is no denying that Yahoo! has faced enormous challenges over the last year, but I believe there is now an extraordinary opportunity to create value for our shareholders and new possibilities for our customers, partners and employees. We will seize that opportunity."
Jerry Yang said, "I couldn't be more pleased with the Board's choice of Carol Bartz as CEO and look forward to returning to my former role as Chief Yahoo. I believe Carol is the ideal person to take Yahoo! forward and I will be honored to be a resource to assist her in any way she finds helpful. I believe Yahoo!'s best years are still ahead of it. For the past 14 years, I have poured all of my energies into this great company -- and I hope to keep contributing to its success for many years to come."
Yahoo! also announced that President Sue Decker has informed the Board that she will resign after remaining with the Company for a transitional period. Bostock said, "The Board thanks Sue for her service as President, the important contributions she has made to Yahoo!'s development in a variety of roles over the past 8-1/2 years, and her willingness to work with Carol Bartz to ensure a smooth transition. We respect her decision to move on to other challenges and wish her only the best."
Carol Bartz has been the Lead Independent Director of Cisco Systems since 2005 and a director since 1996. She also currently serves on the Board of Directors of Intel Corporation and NetApp. She holds a bachelors degree in Computer Science from the University of Wisconsin.