Yahoo got the attention of the digital world on Tuesday when it announced the firing of its latest CEO, Carol Bartz. The announcement came only three months after the board of directors reiterated their full confidence in Bartz’s leadership of the troubled Internet icon, which has lost market share consistently over the last ten years.
Bartz was Yahoo’s third chief executive in just over four years, having replaced co-founder Jerry Yang in January 2009. She’d previously garnered attention for having reversed Autodesk Inc.’s downhill slide and had a general reputation as a no-nonsense leader in the industry. The spartan management style evinced in her early tenure with Yahoo proved lucrative for the company, allowing it to double its operating margins. These early successes eased suspicions that Bartz’s lack of advertising experience might prove fatal for struggling search giant.
The situation at Yahoo turned pear-shaped shortly afterward, following a seemingly endless attempted buy-out by Microsoft and its eventual takeover of Yahoo’s search-driven display ad business. The company continued to lose ground to Google and Facebook when it came to courting large advertising contracts and delivering display ads to consumers. In fact, in a decade that saw massive increases in stock prices for Yahoo’s rivals, its own shares remained almost completely flat.
Industry insiders acknowledged earlier this year that the company was in trouble. Earlier this year, Bartz was blaming Yahoo’s sales teams for the lackluster display ad revenues during Yahoo’s second quarter earnings call. Then Alibaba Group Holding Ltd., a Chinese e-commerce company in which Yahoo holds a 40 percent stake transferred ownership of one of the company’s prized assets to another company. Yahoo’s share prices dropped again, and relations between the two companies have become quite strained.
Tempers flared during Yahoo’s annual shareholder day in June. Though Bartz and the rest of the board tried to focus on their successes in cost-cutting and the traffic spikes seen during recent environmental disasters, investors were having none of it. Unhappy over the company’s sliding stock prices, the loss of display ad market shares to Google and Facebook, and the exodus of executive talent, some shareholders rounded on Bartz personally to voice their displeasure. Though Roy Bostock, the chairman of Yahoo’s board of directors, voiced the board’s “full confidence” in Bartz after the shareholder’s meeting, it took only three months for that confidence to dissipate.
Yahoo’s former CFO, Tim Morse, has been named the interim chief executive until a more permanent replacement can be found. In the official press release, the board announced the formation of an “Executive Leadership Council, tasked with supporting Morse in managing the Company’s day-to-day operations” until a new CEO is hired. Bartz’s dismissal is cited as being “without cause.” This entitles her to a sizable severance package, though most of it is in stock options that are directly tied to the company’s future success.
The price per share for Yahoo stock rose from $12.91 to $13.72 on Tuesday in after hours trading, a gain of over six percent.