Yahoo Fires Bartz, Looks to Turn Around Fortunes

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Yahoo faces yet another leadership vacuum after firing Carol Bartz, the sharp-tongued CEO once lauded for her no-nonsense attitude and willingness to sacrifice sacred cows.

By the time the company's board gave her the boot today, Bartz had come under widespread criticism for failures including a lack of new product hits, a failure to keep pace with evolving ad platforms, and a gutted sales organization that not long ago was considered the best in the business.

Chief Financial Officer Tim Morse will fill her shoes on an interim basis while Yahoo conducts a CEO search. The company's board also appointed an executive leadership council to support Morse, consisting of unnamed "key senior Yahoo executives."

During her two-year tenure, Bartz took aggressive steps to cut costs through layoffs and product shutdowns, a move widely seen as necessary to get the company into fighting shape in the startup-driven Internet economy. However in the process of slimming down its bloated operations, she may have shot the company in the foot. During its last earnings call, she suggested to investors that Yahoo had cut too deeply in its sales organization - losing key relationships with ad agency partners.

"It's not about new competitive developments, it's not about the economy…. The root cause was changes to our sales and leadership force," she said at the time. Its revenues of $1.08 billion for the three months ending June 30 was down from $1.13 billion in Q2 2010.

Bartz's single biggest accomplishment was its colossal search deal with Microsoft. After a months-long negotiation, the two companies agreed to merge their search operations - with Bing replacing Yahoo search on Yahoo.com and other Yahoo-owned web properties. The deal combined the No. 2 and No. 3 engines to create a single contender with approximately 30 percent of the search market, to Google's approximately 65 percent.

Roy Bostock, chairman, said in a statement released this evening, "The Board sees enormous growth opportunities on which Yahoo can capitalize, and our primary objective is to leverage the company's leadership and current business assets and platforms to execute against these opportunities. We have talented teams and tremendous resources behind them and intend to return the Company to a path of robust growth and industry-leading innovation. We are committed to exploring and evaluating possibilities and opportunities that will put Yahoo! on a trajectory for growth and innovation and deliver value to shareholders."

In recent months Yahoo's ability to innovate its ad platforms had come into question. Its Right Media ad exchange is still a leader in ad volume, but has fallen behind Google's Ad Exchange in the area of real-time bidding. Last month, one of the company's key ad technology leaders, Dev Patel, resigned. Patel had led Yahoo's Smart Ads dynamic display ad product and its search retargeting offering.