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Yahoo's Bartz Ousted as CEO Amidst Sluggish Sales and Lost Market Share

Strategic Insights

— 1 min read

Yahoo Inc. made a sudden change at the top on Tuesday, firing its CEO Carol Bartz after three years of stagnant growth, lost market share to rivals, and a failed partnership with Asian owners that hindered expansion in the world's largest web market. The decision follows a strategic review aimed at reviving growth at the most visited U.S. web portal, with Tim Morse serving as the interim CEO. The move sent shares soaring 5.45% to close at $13.61 (U.S.).

Key Takeaways:

  • Yahoo's stock had gained 6.7% in U.S. trading since Bartz took over in January 2009, compared to a 34% increase for the Standard & Poor's 500 index through Tuesday.
  • Under Bartz's leadership, Yahoo failed to make significant headway in the U.S. advertising and search markets, losing ground to Google and Facebook.
  • The company's Asian assets, including a stake in Alibaba Group Holding Ltd. and Yahoo Japan Corp., may be worth more than Yahoo's market value, and the sale of these assets is being considered.
  • Analysts believe that a new CEO with deal-making experience can unlock significant value for shareholders by resolving the dispute with Alibaba and other Asian partners.
  • The company is considering a new structure involving investment from private equity and Microsoft, AOL Inc., or Alibaba as part of its strategic changes.
  • Yahoo's share of the U.S. online ad market is projected to drop to 9.7% next year from 16% in 2009, while Google's market share may increase to 45% and Facebook's portion may more than triple to 7.8%.

Statistics:

  • 5.45%: Yahoo's stock rise on Tuesday after Bartz's departure.
  • $13.61 (US): Closing price of Yahoo's shares on Tuesday.
  • 6.7%: Increase in Yahoo's stock value since Bartz took over in January 2009.
  • 34%: Increase in the Standard & Poor's 500 index through Tuesday.
  • 16%: Yahoo's share of the U.S. online ad market in 2009.
  • 9.7%: Projected drop in Yahoo's share of the U.S. online ad market next year.
  • 45%: Potential increase in Google's market share of the U.S. online ad market.
  • 7.8%: Potential increase in Facebook's share of the U.S. online ad market.

Sources:

  • Bloomberg News.
  • Stifel, Nicolaus & Co.
  • Jefferies & Co.
  • RBC Capital Markets.
  • Needham & Co.
  • eMarketer Inc.
  • 2011 Toronto Star.

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