A game plan for Yahoo’s new CEO to bring back days of glory

Now that Yahoo Inc. has put Carol Bartz at the helm of the slumping company, analysts say her first mission may just be to restore the hip buzz that used to surround the online pioneer.

Yahoo confirmed late Tuesday afternoon that Bartz, former executive chairman of Autodesk Inc., has joined the firm as its new CEO and member of its board of directors.

Bartz is replacing former CEO Jerry Yang, who stepped down last November after the failure of buyout talks with Microsoft Corp., the breakdown of an online advertising deal with Google Inc., and two rounds of layoffs.

“Honestly, first thing is she’ll need to focus on the morale issue,” said Renny Ponvert, CEO of Management CV Inc., whose analysts track CEOs and top executives.  

Ponvert says Terry Semel is to blame for breaking Yahoo. “He created a real morale problem. There’s been a tremendous brain drain. [Bartz] has to restore employee confidence. I think you should see a return to having a hip buzz around Yahoo. I think she’ll get back to the basics.”

Some analysts were quick to note that Bartz doesn’t have experience with consumer Internet or media companies.

Before becoming executive chairman of the board of Autodesk, Bartz was president and CEO of the CAD software and services business for 14 years before stepping down in 2006.

Previously, she was an executive at Sun Microsystems Inc., Digital Equipment Corp. and 3M Corp.

“This will be different. Very different,” said David Card, a principal analyst at Forrester Research Inc.

“She talks about knowing customers and being customer-driven. Yahoo has consumers that use its services. It also has advertisers that market to those people, and it also has publisher customers – other online media companies.

She’s going to have to understand how to keep three distinct customers happy. She’s a software exec, and Silicon Valley knows her and respects her, but she’s not a consumer content business.”

Ponvert, though, doesn’t have any problem with that.

“A lot of people have been surprised, but I think she’s a tremendous choice,” he said. “Being a CEO is about strategy, executing big-picture stuff and raising capital. Whether she’s an Internet person isn’t the issue…. She’s in the top quintile of CEOs — the top 20 per cent.”

Several analysts noted that Bartz is known not only in Silicon Valley, but in global business circles, as a “straight shooter” – someone who doesn’t hesitate to speak her mind.

“More than anything, let’s give this company some friggin’ breathing room,” she told reporters in a conference call on taking over as CEO. “It’s been too crazy, everybody on the outside deciding what Yahoo should do, shouldn’t do, what’s best for them. That’s gonna stop.”

She said Yahoo Inc. has been pushed around by outsiders and needs to chart its own course, though she hasn’t yet determined what that course should be.

She said she first needs to first talk with employees, customers and investors to find out more about the company – and wouldn’t specify  how long that would take. “Let’s not put ourselves on some crazy timeline, let’s let this process evolve.”

Bartz did say that Yahoo should focus on being the best company in all the markets in which it competes, and that it should create new markets, both geographic and vertical.

“Yahoo has unfortunately been battered in the last year, and [this] caused it to look internally and be protective, and that’s nonsense for such a great company and such a great franchise,” Bartz said. The company should now “get outward-looking and kick some butt.”

The Yahoo board approached her about the job in December, Bartz said, and she was excited to jump in. “I wouldn’t have taken the job if I didn’t believe there’s a huge opportunity here,” she said. “I just see this company as a company with enormous assets that, frankly, could use a little management.”

Bartz may have more to say about the company’s direction when she speaks on Yahoo’s conference call about its fourth-quarter financial results, which are scheduled to be announced Jan. 27.

Meanwhile, her outspokenness alone will be a strong shot in the arm for Yahoo compared with the “soft-spoken, walk-lightly style of Yang,” according to Allan Krans, an analyst at Technology Business Research Inc.

“Yahoo is losing market share to Google,” noted Krans. “[Yahoo] is struggling to find out how it’s going to excel in a market that has changed dramatically over the past eight years – advertising models have shifted and the way content is delivered.

It’ll be interesting to see how [Bartz] starts to roll out some of the decisions that need to be made over the next several months.

She’ll have to make decisions on the cost side and deep business-model decisions.

On the search side, they continue to lose share. Will they try to rectify that or focus on other areas, like digital media? Those are going to be tough decisions to make over the next six months.”

Both Krans and Ponvert noted that Microsoft and the idea of a buyout or merger is going to be a backdrop to all the decisions that are about to be made.

“You have a contingent there on the board that is focused more on the buyout options,” noted Krans. “There will continue to be a tension there. Just having chosen a new CEO puts a lot of fears and uncertainty to rest. You get a lame-duck CEO out of the way, and they can start to move forward in whatever direction is chosen. But at least there’s some closure there.”

Ponvert said that Bartz comes with too high a salary and profile to simply be brought on board to orchestrate a buyout. “She’s not an inexpensive hire,” he added. “It’s unlikely you’d bring her in for a quick flip. I’m sure the plan is bigger than that.”

While Card said Yahoo definitely is a “salvageable” company with a lot of opportunity ahead of it, Krans noted that with Bartz coming aboard during a time of change in online media and a bad economy, Yahoo is sure to look like a slightly different company in a few years.

“I think the next year is going to be a big determinant,” said Krans.

“The decisions they make now will have a profound effect on where the company ends up in five years. It’s going to be a different company. With the Internet and content and search, they’re certainly behind the ball. You’ll see rapid changes as they try to gain back some of the ground they’ve lost.”

With files from Stephen Lawson

Source: Computerworld.com

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