Wednesday, September 7, 2011

For Yahoo, Firing Of Bartz May Be Beginning Of End

Well, what now for Yahoo?

The company confirmed Tuesday that Carol Bartz has been ousted as CEO, with CFO Tim Morse taking over on an interim basis. First reported by AllThingsD’s Kara Swisher, the news follows a post Swisher wrote earlier in the day that suggested a variety of potential investors were circling the company, effectively looking to pick away the meat from what remains on the Internet company’s bones. Among those named as possible bidders: News Corp., AT&T, Verizon and various private equity firms.

Yahoo said it has formed an “Executive Leadership Council” to support Morse until a permanent CEO is chosen. The council also will support a “comprehensive strategic review” by the company’s board. Chairman Roy Bostock said in a statement that the board is “committed to exploring and evaluating possibilities and opportunities that will put Yahoo on a trajectory for growth and innovation and deliver value to shareholders.”

In a post earlier today, my colleague Jeff Bercovici lists a variety of potential replacements for Bartz, including recently installed Yahoo Americas chief Ross Levinsohn, among others. But the focus on the Street won’t be on succession. Investors instead will be zeroed in on the break-up value of the company.

Indeed, after a series of essentially failed CEOs – Terry Semel, Jerry Yang and Bartz – I suspect there will be increasing concern on the Street that Yahoo is simply not governable in its current state. While Yahoo gets huge traffic to some of its key properties, like Yahoo Finance, Yahoo Sports and Yahoo News, the company is clearly struggling to find an identity at a time when consumers are spending more and more time on social networking sites and mobile devices.

There lately has been increasing pressure from the Street for the company to monetize its investments in Yahoo Japan and Alibaba Group – pressure that the company may no longer be able to resist. However, the Street’s confidence in the value of Yahoo’s Alibaba holdings has been tarnished by the recent public squabbling between Bartz and Alibaba foudner Jack Ma over the ownership of the Alipay online payments business.                   More