Investors welcomed news of Yahoo CEO Carol Bartz’s firing enthusiastically in after-hours trading on Tuesday evening, with shares of the company finishing the session up more than 6% to $13.72 per share.
As we noted earlier today, Bartz’s tenure ended abruptly this afternoon when Yahoo Chairman Roy Bostock informed her (via phone) that she was being terminated, a move that Bartz was able to share with the entire company via an email sent from her iPad.
Yahoo has named its CFO Tim Morse as interim CEO and appointed an “executive leadership council” to help fill the void as the company searches for a permanent leader.
The jump in Yahoo shares on Tuesday is nearly equal to the small gain the company has eked out since Bartz took over in January 2009. The move ends a rocky nearly three-year tenure of failed initiatives and unmet expectations. Bartz, the strong-willed former CEO of Autodesk, was brought in to clean house and streamline operations at the company after it rejected Microsoft’s generous acquisition offer and decided to go it alone.
Bartz’s firing wasn’t unexpected. As I argued in a recent Social Analyst column, a battle over Yahoo’s future has been brewing for months. Investors were unhappy with her performance. Yahoo’s share price has risen a meager $1.15 since Bartz took the helm. And most significantly, the company hasn’t found a way to create new revenue streams, stabilize its finances or retain its top engineering talent.
“As long as Bartz is in charge, there will be two camps battling for the future of Yahoo: the group that wants to give Bartz a chance, and the faction that wants change now. This internal battle will only create more friction and distractions for the company, unless Bartz can find a dramatic way to silence the growing chorus of critics.
Neither side seems to have an answer to a more fundamental question, though: how Yahoo becomes “the world’s premier digital media company,” the company’s recently stated goal? Bartz had better find an answer to that question soon, before Yahoo’s shareholders start looking to someone else for the answer.”Surprise: Yahoo is now looking to somebody else for the answer.
Why Was Bartz Fired?
When Bartz first took the job back in January 2009, we were skeptical of the move. Here’s what our Editor-in-Chief Adam Ostrow said at the time:“First reaction: what exactly does Autodesk have to do with a consumer-focused Internet company like Yahoo? Bartz certainly sounds like she has a long history of running a big company – Autodesk has more than 7,000 employees and $2 billion in annual revenue – but what expertise and vision does she have that’s relevant to one of the world’s biggest Web companies, in desperate need of re-inventing itself?”His words have turned out to be prophetic. Bartz had no clue how to reinvent a stagnant web company into a digital media powerhouse. Despite all of the tools at her disposal, her legacy will probably be defined by Yahoo’s ridiculous squabble with Alibaba.
Bartz may have been an effective manager, but didn’t have the vision needed to lead Yahoo. What Yahoo needed was a Steve Jobs. Unfortunately co-founder Jerry Yang failed at that task, which led to the hiring of Carol Bartz.
The Alibaba controversey isn’t what did Bartz in, though. It wasn’t her inability to provide direction for the company, either. Ultimately, the reason she is no longer CEO is simple: she failed to create shareholder value.
Yahoo’s share price was $11.59 the day before her appointment. When the markets closed on September 6, the stock was worth $12.74. That is an increase of less than 10%, with most of that value being derived from the skyrocketing value of its China assets. The entity known as Yahoo is worth less today than it was when Bartz took over as CEO.
It doesn’t matter whether you’re the founder or most-seasoned CEO on the planet. If you can’t increase shareholder value, you will not last long as CEO at a publicly traded company. Jerry Yang and Carol Bartz both learned this the hard way.
Bartz’s inability to move Yahoo’s stock price is why she is no longer at the helm of one the Internet’s most important and storied companies. Now it’s up to Jerry Yang and Roy Bostock to find a new CEO who can provide the vision and leadership the struggling company so desperately needs.
No comments:
Post a Comment