Posted by: Rob Hof on January 15, 2009
Yahoo’s stock fell more than 6% today as investors digested reports on what new CEO Carol Bartz told employees during an all-hands meeting yesterday. Some reports indicated she said her “gut” told her not to sell off the search business. That prompted some analysts and investors to assume a deal with Microsoft, which Yahoo rejected twice last year, was more unlikely than they had assumed now that a new CEO is in place to take a fresh look.
But from a couple of people I’ve talked to, the nuance was slightly different. According to one person who was there, what she said was that her gut feeling was, Why would you sell? In other words, while she seemed somewhat skeptical, this reading of her comments indicates she could be convinced—if, after talking to people who favor a deal and those who don’t, which she said she plans to do, it looked like a deal of some would be good. She also said she saw reasons to do a deal and reasons not to do a deal.
This is understandably politic, if nothing else, since you don’t want to send remaining search and search ad talent fleeing for the exits again, which happened last year when a deal seemed more likely. And you certainly don’t want to give up any bargaining position to Microsoft, the only real prospect to make a deal.
So it seems to me that investors overreacted—big surprise, since this is, after all, Yahoo, whose actions have confounded most people’s expectations over the past year.
What seems clear is that at the least, no deal is going to happen immediately. Which is exactly what Bartz signaled during a brief phone conference Tuesday after her appointment when she declared, “Let’s give this company some friggin’ breathing room.” But clearly investors aren’t inclined to give her all that much.
Employees, however, may be another matter. One person at the all-hands meeting reports that “employees were really pumped” by her evident energy. While this person is a Yahoo partisan, I don’t doubt it. She managed the same trick at Autodesk, and many employees are yearning for more decisive leadership.