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Carol A. Bartz had been under pressure to turn around Yahoo's fortunes since she became its chief executive in early 2009.
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¶ She went out with the same outspoken style she used while running the company. In an e-mail she sent to employees from her iPad, titled “Goodbye,” Ms. Bartz wrote: “I am very sad to tell you that I’ve just been fired over the phone by Yahoo’s chairman of the board.” Ms. Bartz was informed of the board’s decision while she was traveling to New York from Maine, according to a person familiar with the board’s action.
¶ She also wrote, “It has been my pleasure to work with all of you and I wish you only the best going forward.”
¶ Ms. Bartz has been under pressure from her first day in the job to turn the company around, and in recent months the pressure from major investors intensified. The company remains adrift despite management shuffles, layoffs and the shedding of underperforming services. She engineered a deal that turned over its search operations to Microsoft, but that has also failed to live up to expectations.
¶ Timothy Morse, the company’s chief financial officer, will serve as the interim chief executive. Yahoo also said it had started a strategic review of the company’s options, including possible divestment of its Asian holdings. It cautioned that no decisions had yet been made.
¶ The company also said its directors named five other senior Yahoo executives to an executive leadership council that is intended to help Mr. Morse, a former chief financial officer at Altera, a semiconductor makers, and at General Electric Plastics, manage the company.
¶ “Yahoo hasn’t asserted what it wants to be — whether it wants to be a media or technology company — and Carol, rightly or wrongly, is being blamed for a bad search deal and a less than stellar performance,” said Jordan Rohan, an analyst with Stifel Nicolaus.
¶ Investors have long tried to pressure Yahoo to sell itself or at least sell major pieces of the company. Yahoo rejected a $33 a share buyout offer from Microsoft in 2008.
¶ Yahoo’s shares were essentially flat during Ms. Bartz’s two-year tenure, closing at $12.91 in regular trading on Tuesday. In after-hours, following the news of her departure, Yahoo’s shares gained 6.3 percent to $13.72.
¶ Ms. Bartz joined Yahoo in January 2009 after investors became dissatisfied with the stagnant growth and indirection under its previous chief, Jerry Yang, a co-founder of the company. Her hiring was initially met with optimism by Wall Street, which saw her as a tough-talking savior who could whip the company into shape.
¶ But online advertising revenue at the company remained flat even though the ad market was growing quickly.
¶ Although Yahoo draws one of the largest audiences anywhere on the Web — more than 600 million unique visitors to all its services, including its search page and its media sites like news, finance and sports — it has been unable to significantly increase its advertising revenue.
¶ Yahoo’s share of display advertising in the United States, supposedly the company’s strength, is expected to decline to 13.1 percent this year from 14.4 percent in 2010, according to estimates from eMarketer, a digital marketing research firm. Meanwhile, Facebook is expected to gain market share.
¶ As recently as June, Roy Bostock, Yahoo’s chairman, voiced support for Ms. Bartz. At Yahoo’s annual shareholder meeting, he lauded her for streamlining Yahoo’s operations, focusing the company on its strengths like content and overhauling its infrastructure. “The hard-won progress that we have made is why this board is very supportive of Carol and the management team,” Mr. Bostock said at the time.
¶ But more recently, Yahoo’s board concluded that it had given Ms. Bartz enough time and that a change in leadership was needed, according to the person familiar with the board’s action. The final decision was made during two meetings of the company’s board in recent weeks, without Ms. Bartz or Mr. Yang present.
¶ Some analysts questioned why the directors had acted so suddenly, without having a successor ready. Criticism for the management of the company has also been directed at Mr. Bostock and the directors. Colin W. Gillis, an analyst with BGC Partners, said the board should share some of the responsibility for Yahoo’s stagnation and should itself be replaced. “The board needs to look in the mirror,” he said. “Where’s the board’s culpability in this?”
¶ He asked, “Are they going to seek a replacement, or is Tim just going to be tasked with carving the company up?”
¶ A sale is a “nonstarter,” said the person familiar with the board’s action. More likely is a sale of Yahoo’s Asian investments — it holds valuable stakes in Chinese e-commerce conglomerate Alibaba Group and Yahoo Japan — or the sale of some of its communications services.
¶ “I think there’s a 50-50 shot that Yahoo gets pushed into play, and that investors try to wrest control of the company from its existing board of directors,” said Mr. Rohan, the analyst. “It’s not clear what investors could do right now except hope and pray that the interim leadership gets Yahoo back on the right track.”
¶ The news of Ms. Bartz’s firing was first reported by All Things D, a technology news Web site.
¶This article has been revised to reflect the following correction:
¶Correction: September 7, 2011
¶
Because of an editing error, an earlier version of this article misstated Yahoo's share of online display advertising in the United States, as estimated by the digital marketing research firm eMarketer. Yahoo's share is expected to decline to 13.1 percent this year from 14.4 percent last year, according to the firm; it is not expected to decline 13.1 percent this year after falling 14.4 percent last year.
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