Tuesday, March 2, 2010

Yahoo CEO indicates turnaround could take years

Yahoo Inc. CEO Carol Bartz says she hopes investors growing impatient for her to turn around the slumping Internet company remember how long it took for Steve Jobs to revive Apple Inc.In a Tuesday meeting to celebrate Yahoo's 15th anniversary, Bartz reminded reporters that Apple still struggled after Jobs became CEO in 1997. That marked his return to a company he had co-founded two decades earlier.

It wasn't until Jobs unveiled the iPod in late 2001 that Apple's profits and stock price began to soar again. Apple has become even more prosperous in the last few years as the company developed ever-sleeker computers and trendy gadgets, such as the iPhone and the iPad, a computer tablet scheduled to hit the market later this month.Jobs "knew the DNA (at Apple) better than anyone and it took him four years," Bartz said. "I know people want to see magic things happen (at Yahoo). The magic things happening are deep inside our little system here."

Yahoo's stock price has gained nearly 30 percent since Bartz became CEO nearly 14 months ago, even though revenue and earnings have sagged. The shares closed at $15.73 Tuesday, down 6 cents.Apple's stock price had climbed by about 50 percent 14 months after Jobs' returned as CEO. The shares dipped 14 cents Tuesday to close at $208.85. That's a 37-fold increase from where they stood whenApple named Jobs CEO in September 1997.

Yahoo shareholders will probably be happy if Bartz can push Yahoo's stock price above $33. That's what Microsoft Corp. said it would pay to buy Yahoo in its entirety in May 2008 only to withdraw the bid after Yahoo balked at the offer.
Bartz, 61, is working under a four-year contract that expires in early 2013.
The challenges facing Bartz have been compounded by the worst U.S. recession in 70 years. The economic uncertainty depressed online advertising, the main source ofYahoo's income.

Yahoo's quarterly revenue has declined in five consecutive quarters. Bartz expects the downturn to end with a modest revenue gain during the current quarter ending March 31.To help sell more advertising, Bartz has been trying to persuade Web surfers to spend more time on Yahoo's services instead of dwelling at increasingly popular hangouts such as Facebook.

Toward that end, Yahoo has renovated its front page and committed to spending more than $100 million on a marketing campaign that started last fall. Bartz said Tuesday that she has been disappointed with the marketing campaign's performance so far in the United States, but likes what she has seen in other markets, particularly in the United Kingdom and France. She saidYahoo is tweaking its commercial messages in the United States.Yahoo is feeling confident enough to expand its payroll and buy more startups.

Bartz eliminated 800 jobs shortly after she became CEO, but Yahoo added 700 employees during the final three months of this year. The work force will expand again this year, Bartz said Tuesday, although she declined to specify by how much.
Yahoo has been a seller so far this year. In the first two months of the year, it sold e-mail provider Zimbra and the online help-wanted site HotJobs in a deal that still requires regulatory approval.Bartz said Yahoo is mostly interested in small companies that have a "good idea with good little teams." That mirrors the philosophy of rival Google Inc., which has bought eight companies in the past seven months, including a photo editing software service Picnik that works with Yahoo's Flickr site.

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