Yahoo CEO is fired amid 'dull' growth

“I am very sad to tell you that I’ve just been fired over the phone by Yahoo’s Chairman of the Board”. These were the last words from Carol Bartz, the 62-year-old former CEO of Yahoo. The email, sent on Tuesday, saw her sacked after a “lack of a turnaround for the business”.

1 Billion US dollars. Enough to buy infinite Yahoo memberships, as free as they are. It seems that is all Yahoo is renowned for now; many email accounts and abnormal bulletins on the homepage. Yahoo had a revenue of $1 Billion last year, and was still described as being “largely flat in recent years” by The Wall Street Journal. Carol Bartz was therefore sacked on Tuesday (6/09/11) after two and a half years as CEO of the once market-leading company of the dot-com generation. So, why?

Stock increase

Bartz had one year left on her contract so the decision to dismiss her now seems to suggest change was needed immediately. In fact, the day after her departure saw Yahoo’s stock close with an increase of 5.4% the next day. Optimism is on the rise again it seems, almost rather embarrassingly, as soon as Bartz was deemed unfit for her duties. Does it come has a surprise? If you look on Yahoo, or have followed its existence, you’d know that it hasn’t changed too much. From being the no.1 search engine at the beginning of the last decade it has, in recent years, lost ground to Google and been slightly damaged by the surge of Facebook. In fact, the number of visits onto the site from U.S viewers has dropped by 33% since Carol Bartz arrived.

However, Ms. Bartz must have some credit. She overhauled the organisational structure to make it more decentralised and challenged the efficiency of the business. Unfortunately, her response to a reporter back in 2010 seems rather ironic nowadays.

Reporter: Why isn’t Yahoo as hot as Facebook?

Bartz: Remind me, what’s their revenue?

Where now?

Yahoo is to now focus on organic growth. Organic growth is growth which is achieved ‘naturally’, usually from sales, and not from external sources such as mergers or acquisitions. It needs to think of innovative ways to regain its market position, with the stand-in interim CEO Tim Morse given the go-ahead to steer the turn-around. Expect in the very near future features from Yahoo to engage the late teens/young adult demographic which Facebook has done so well to draw in. Hotmail might be an example of such developments with its unlimited storage capacity and connections with MSN messenger. Or maybe this really is the beginning of the end of Yahoo, with competition becoming increasingly competitive. It’s safe to say, Yahoo’s dominance is now over and the expulsion of their CEO seems to indicate they feel the same way. This is a new beginning for Yahoo and new possibilities for the market. Watch this space.

Glen Gostlow

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