© The Financial Times Ltd 2013 FT and 'Financial Times' are trademarks of The Financial Times Ltd.
Last updated: September 7, 2011 2:11 pm
Investors cheered the departure of Carol Bartz as chief executive of Yahoo with boost to the share price to more than $13 each on Wednesday morning.
The stock rose from a closing price on $12.91 on Tuesday to $13.36 by mid-morning Wednesday in New York trading. The shares were under $13 when Ms Bartz joined the company in January 2009, and have largely remained far below the price offered in a takeover bid from Microsoft the year before.
The Microsoft offer for $31 a share valued Yahoo equity at about $44bn against a current market capitalisation of about $16.8bn.
Msl Bartz was summarily dismissed as Yahoo chief executive after less than three years atop one of the world’s most-visited internet sites amid continuing investor complaints about its sagging stock price, low growth and difficulty with Asian investments.
In a terse e-mail to employees sent late on Tuesday, Ms Bartz said that she had been ousted “over the phone” in a conversation with Roy Bostock, Yahoo chairman, and that she wished remaining employees luck.
Yahoo said in a subsequent press release that the board had named Tim Morse, chief financial officer, as interim chief executive as it seeks a permanent replacement.
“We have talented teams and tremendous resources behind them and intend to return the company to a path of robust growth and industry-leading innovation,” Mr Bostock said. “We are committed to exploring and evaluating possibilities and opportunities that will put Yahoo on a trajectory for growth and innovation and deliver value to shareholders.”
Ms Bartz, formerly the chief executive of design software maker Autodesk, was initially greeted warmly by Yahoo shareholders after the previous leadership failed to consummate an acquisition by Microsoft, which was willing to pay a large premium to bolster its search-engine competition with Google.
But Ms Bartz came under fire before her first year was up after negotiating a more limited alliance with Microsoft. In that deal, Yahoo tapped Microsoft to produce the automated part of its search results, saving development money but splitting ad revenue.
The complex arrangement has failed to generate as much advertising revenue as executives had predicted. In the meantime, Yahoo has shown nowhere near the growth in user time spent on its site as more innovative and younger companies, such as Facebook and Twitter.
That has kept display advertising revenue, where Yahoo had long been the top player in North America, hobbled as well. Researcher firm eMarketer predicted in June that Facebook would pass Yahoo in that category this year.
Yahoo had at least two major rounds of job cuts under Ms Bartz as she tried to refocus the company on core strengths and pitch advertisers on premium packages.
The final strike against Ms Bartz may have been her handling of two of Yahoo’s most valuable remaining possessions, minority investments in Yahoo Japan and in Alibaba Group.
Under shareholder pressure, Ms Bartz has said Yahoo is exploring ways to monetise the stake in Softbank’s Japanese Yahoo network without the tax penalty that would come with an outright sale.
But though those talks continue in private, a fight with Alibaba and its founder Jack Ma has played out in an embarrassingly public way.
Alibaba, which is the largest e-commerce company in China, turned over control of its online payments unit to a group run by Mr Ma without establishing terms for the group to compensate Alibaba. Yahoo has a board seat at Alibaba but said it was informed belatedly of the sale, raising questions about whether it could be squeezed out of more Alibiba value.
After months of heated negotiations, Alibaba agreed in July to keep 37.5 per cent of Alipay or receive a payment of between $2bn and $6bn if the payment business goes public, plus royalties.
Copyright The Financial Times Limited 2013. You may share using our article tools.
Please don't cut articles from FT.com and redistribute by email or post to the web.