Yahoo-Microsoft deal is bold step for Bartz
SAN FRANCISCO -- But in a sign of the daunting challenge she faces as she tries to revive the troubled Internet power, even her vow that the alliance would deliver "boatloads of value for Yahoo" left many investors stony faced.
Yahoo shares fell 12% on Wednesday to $15.14 as Microsoft shares rose 1%, to $23.80.
Some had hoped for cash or an asset sale to Microsoft.
"Investors were disappointed there was no upfront payment," says Karsten Weide, a tech analyst at market researcher IDC.
Others seemed to have been scared by the prospect of being tied to Microsoft, whose efforts to take on Google "haven't moved the needle much," says Charles King, an analyst at Pund-IT.
But Bartz, in a phone interview, says she takes it all in stride.
"I'm not a CEO who believes in short-term things," she says. "This will play out well in the long run."
Yahoo estimates that the pact with Microsoft, which the companies hope to close next year, will boost its operating profit by $500 million a year. It also could save about $275 million in capital expenditures now that it can use Microsoft's search technology instead of continuing to develop its own.
Wall Street's initial reaction to the deal also follows weeks during which Yahoo shares climbed as news reports cited unnamed sources who said that an agreement was near. Some short-term investors may have cashed out to score a quick profit.
Bartz says, though, that, "It's very possible that I'm taking it on the chin because we haven't explained the deal well."
In the end, she wants actions to speak louder than words. Prior to the Microsoft deal, she rocked the Internet pioneer by reshuffling top management, redesigning Yahoo's home page and reducing 700 jobs — 5% of its workforce.
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