Yahoo chief fired over phone in bid to lift growth

Yahoo yesterday ousted chief executive Carol Bartz and announced a strategic review to help the most-visited US web portal revive growth and lure users who have defected to rivals in web search and social networking.

Chief financial officer Tim Morse will take over as interim chief executive, Sunnyvale, California-based Yahoo said yesterday. The company said it would hire a search firm to help it find a permanent chief executive.

Under Bartz, who took over as CEO in January 2009, Yahoo has frustrated investors and failed to keep Google and Facebook from siphoning off internet users and advertising revenue.

The management change and strategy overhaul showed the board was listening to shareholders, said Ken Sena, analyst at New York-based Evercore Partners.

"It shows some accountability for the dissatisfaction that investors have felt over the last few years," Sena said. "The turnaround efforts have not worked and trends seem to be getting worse. I see this as a positive step."

Since Bartz took the reins from co-founder Jerry Yang, Yahoo's stock has gained 6.7 per cent, compared with a 34 per cent increase for the Standard & Poor's 500 index.

"I am very sad to tell you that I've just been fired over the phone by Yahoo's chairman of the board," Bartz said in a memo sent to staff and obtained by Bloomberg News.

"It has been my pleasure to work with all of you and I wish you only the best going forward."

As chief executive, Bartz slashed costs with job cuts and a search partnership with Microsoft. Still, Yahoo failed to make much headway in the US advertising and search markets.

Once a US$80 billion ($96.75 billion) company, Yahoo's share of the US online ad market is estimated to drop to 9.7 per cent next year from 16 per cent in 2009, according to New York-based research firm EMarketer.

Google's may increase to 45 per cent, while Facebook may more than triple its portion of the online ad market to 7.8 per cent, EMarketer predicts.

Yahoo reported second-quarter revenue in July that fell short of estimates as Bartz's overhaul of the US sales force made it harder to close deals and slowed growth in display advertising.

"Some of the issues have been company-specific problems that have been under her watch," said Ross Sandler, an analyst at RBC Capital Markets in New York.

"The slowdown in their display business is simply from her inability to keep the display team together over the last 18 months," said Sandler, who rates Yahoo "outperform" and doesn't own the stock.

Bartz's termination is considered "without cause", and the company plans to fulfil the severance terms of her contract, according to a person familiar with the board, who asked not to be identified because the agreement was confidential.

Yahoo isn't paying Bartz any additional compensation after ending her contract early, the person said.

- Bloomberg