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Yahoo picks tough-talking Carol Bartz as new CEO

Wed, 01/14/2009 - 7:10am
Michael Liedtke, AP Technology Writer

SAN FRANCISCO (AP) – It didn't take long for Carol Bartz, Yahoo Inc.'s new chief executive, to demonstrate that her style will differ dramatically from that of her predecessor – Jerry Yang, the genial, soft-spoken co-founder of the struggling Internet company.

Carol Bartz 
Carol Bartz
Less than an hour after Yahoo announced her hiring late Tuesday, Bartz was vowing to ensure the company gets some "friggin' breathing room" so it can "kick some butt."

"I see this as a company with enormous assets that frankly could use a little management," Bartz said on a conference call that was cut short so she could hustle off to her first meeting with her new subordinates at Yahoo.

The decision to lure Bartz, 60, from software maker Autodesk Inc. ended Yahoo's two-month search to replace Yang, who surrendered the CEO reins after potentially lucrative deals with rivals Microsoft Corp. and Google Inc. both collapsed.

A self-described "straight shooter," Bartz is known for a no-nonsense approach that enabled her to turn around Autodesk after she battled back from breast cancer. She is now being counted on to work her magic again at Yahoo, a prized Internet brand that has been losing its luster with Web surfers, investors, and even its own employees for the past three years.

"I wouldn't have taken the job if I didn't believe there was a huge opportunity here," Bartz assured analysts.

After a tepid early reaction, investors seemed to warm up to Bartz's appointment. Yahoo shares fell 12 cents Tuesday to close at $12.10, then recovered 35 cents, nearly 3 percent, in extended trading.

Bartz's appointment could set the stage for Microsoft to renew its efforts to buy Yahoo's Internet search operations as a way of mounting a more serious threat to Google, the market leader. Microsoft had been reluctant to deal with Yang because he rebuffed several previous overtures, including a $47.5 billion offer to buy Yahoo in its entirety last May.

Microsoft subsequently withdrew that bid, valued at $33 per share (story here). Yang had hoped to placate shareholders by using Google's superior technology to sell some of the ads alongside Yahoo's search results, but that idea unraveled in November after antitrust regulators threatened to block the deal (story here).

Yahoo's decision to bring in an outsider apparently irked its president, Susan Decker, who also was a candidate for the CEO job. She now plans to resign after a transitional period. Both Decker and Bartz are on Intel Corp.'s board of directors.

"We are very confident [Bartz] is the right leader to get Yahoo back on track and help the company achieve its full potential," Yahoo Chairman Roy Bostock said.

Bartz's track record indicates she will move quickly to build upon Yahoo's strengths while doing her best to shed the weaknesses.

\"She is able to see the essence of things because she doesn't spend a lot of time worrying about how people are going to feel," said Nilofer Merchant, a former Autodesk manager who now heads technology consultant Rubicon. "She is driven by doing the best thing for the business."

Forrester Research analyst David Card said Yahoo desperately needs someone to crack the whip after years of drifting aimlessly despite having a vast online audience, which it touts as 500 million people worldwide.

"It's a salvageable company," Card said. "They just need to get their act in gear and make some tough decisions. [Bartz] is also going to have to restore employee morale in the company and make sure everyone is singing from the same handbook."

Bartz spent nearly 17 years at Autodesk, which specializes in making design software for architects and engineers. She was the San Rafael-based company's CEO from 1992 until 2006, when she stepped aside to become executive chairman – a job that paid her a $500,000 salary. Yahoo didn't immediately announce her new compensation package.

While Bartz was CEO, Autodesk's annual revenue ballooned from nearly $300 million to $1.5 billion. Perhaps more importantly to Yahoo's long-suffering shareholders, Autodesk's stock price rose by an annual average of nearly 20 percent during Bartz's reign, beating the 10.6 percent annual average for the Standard & Poor's 500 index.

Bartz had established her management chops in nine years at Sun Microsystems Inc., where she eventually became the No. 2 executive behind the server maker's then-CEO, Scott McNealy. She also has worked at Digital Equipment Corp. and 3M.

Despite Bartz's resume, she will likely face questions about whether she is a good fit at Yahoo because she lacks any background in advertising – the primary source of Yahoo's income.

Bartz brushed aside that concern. "I suspect I have the brainpower to understand media," she said. "I also suspect there are people here that can help jump-start my education."

Yahoo also is far larger than Autodesk, with annual revenue of more than $7 billion and roughly 13,000 employees, nearly twice the size of Autodesk's work force.

As one of the first women to run a technology company, Bartz is used to being underestimated. Even after she had been Autodesk's CEO for years, some of her male counterparts occasionally mistook her for an administrative assistant while she was attending industry conferences.

Before graduating from the University of Wisconsin in 1971 with a degree in computer science, Bartz was a cheerleader, homecoming queen and a cocktail waitress – a job that helped pay her college tuition.

In her corporate life, Bartz talks more like a sailor, said Merchant, who recalls Bartz starting days with profanity-laced phone calls demanding to know why a sale hadn't been closed. After dressing down a worker, Bartz usually found a way to end the conversation on an encouraging note. "She always wanted to make sure the job got done," Merchant said.

Bartz hasn't hesitated to get rid of employees incapable of executing her strategy. Within six months of taking over at Autodesk, she had purged its management ranks.

If Yahoo turns its search operations over to Microsoft, many analysts expect the company to lay off thousands of workers to save money. As it is, Yahoo just dumped about 1,500 workers to help shore up its profits during the recession. The company also has lost many top managers during the past two years as Yahoo's malaise worsened.

Bartz also will have to coexist with Yang, who will revert to his titular role of "chief Yahoo" while remaining on the company's board. Those two also share a boardroom together as directors at Internet gear-maker Cisco Systems Inc.

"I believe Carol is the ideal person to take Yahoo forward, and I will be honored to assist her in any way she finds helpful," Yang said.

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