Carol Bartz’s appointment as Yahoo’s new CEO probably makes a search deal with Microsoft more likely, and a strategic alliance with AOL less probable. And her fighting words in a first press conference suggest she isn't warming the seat in the corner office for anyone.
By virtue of being anyone but Jerry Yang, Bartz may be able to lure Microsoft back to the table to hammer out a limited partnership in the form of a search deal both sides – and just about everyone in between – has said is a necessary step in their individual efforts to battle Google.
But for the moment, she doesn't even seem to care. She told journalists to stop already with the speculation and advice, and explained that she would take her time listening to employees and customers before making any big decisions.
This may not be music to the ears of that contingent (Carl Icahn) that wants Yahoo to tie up or sell out, like yesterday. But it may indicate that the directors have found in Bartz the best of all possible worlds: an untarnished outsider not imprisoned by corporate culture, a patient leader who takes the long view and a true believer who wants to restore Yahoo to its rightful place among the internet's giants.
But first, Bartz will need to provide Yahoo with a drama-free transitional period, and maybe score a quick win or two. And that's where the no-brainer search deal with Microsoft comes in.
“I think that Bartz’s becoming CEO makes a Microsoft/Yahoo joint venture on search more likely,” said Standard & Poor's analyst Scott H. Kessler. “More likely than if the process of trying to find and install a new CEO took longer.”
Collins Stewart LLC's Sandeep Aggarwal thinks the decision to bring her on is the final step needed to secure a deal with Microsoft, and once complete, the new CEO can then focus on what she does best – long term growth initiatives.
Yahoo and Microsoft have been doing this dance since last spring when Yang turned down an acquisition offer of $33 per share, and with unhappy investors eagerly looking for change, Bartz could be the spark that finally brings a deal to fruition with her experience turning around a giant software design company as well as her history of being very touch and outspoken about her intentions (always a good thing when it comes to Yahoo).
Steve Ballmer has said multiple times that complete acquisition talks are over but that a search deal is an attractive option. Kara Swisher at AllThingsD reports that a new proposal is already all “ticked and tied” according to her sources at Microsoft, who say the deal was merely pending the management change at Yahoo.
“Strategically the smarter decision would be an outsourcing agreement that enables Yahoo to control how much business they wanted to shift to the Microsoft platform, and also to retain important conversion data that could be useful when search and display advertising sales become more integrated,” said Marianne Wolk of Susquehanna Financial Group.
Bartz’s interview yesterday certainly demonstrated her eagerness for change, acknowledging the options set out on the table, but there are still a number of uncertainties in play.
Bernstein Research analyst Jeffrey Lindsay is among others concerned with her lack of consumer or advertising background, direct international management and M&A experience, and thinks the Bartz decision only makes sense if Yahoo is indeed expecting some sort of takeover.
“While we think Ms. Bartz has been a good CEO at Autodesk, a B2B
software company, we question the logic for her selection as CEO at
Yahoo unless, of course, she is just keeping the seat warm until a deal is done with Microsoft,” Lindsay writes.
Bartz argued in a press conference Tuesday that she can learn, and has proved herself by turning around software design company Autodesk.
"I didn't know CAD (computer-aided design) when I joined Autodesk, I didn't know hardware when I joined Sun," she said. "I am a technology person, I am a market-driven person, I love customers. So I suspect I have a little brainpower to learn what it takes to understand media."
Kessler also thinks her lack of experience isn’t necessarily a bad thing, since an outsider providers a fresh perspective for Yahoo, but at the same time the learning curve that could delay some of her decisions.
Meanwhile, investors are looking for quick results.
Former Yahoo execs told Wired a few months ago that a fresh face is the way to go, and that the new CEO needs to narrow its focus. This strategy with Bartz, however, might ultimately also rule out a rumored
AOL acquisition.
“Yahoo is much better off focusing on its existing operations and trying to simplify and downsize those rather than taking on what undoubtedly would be an unyielding challenge in acquiring integrating and consolidating AOL’s disparate operations,” said Kessler.
Yahoo has certainly looking to act fast in its attempt at a turnaround, as the new CEO came on board nearly in time with expectations, but it will ultimately be up to Bartz and her deep dive into the company before any real deals are conducted.
“Let’s not put ourselves in some crazy timeline,” she said at her first press conference. “Let’s give this company some freakin’
breathing room.”
Photo: Yahoo
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