Carol Bartz inherited tough situation as Yahoo CEO

SAN FRANCISCO -- Carol Bartz never seemed the right fit at Yahoo, the popular website that fired her late Tuesday after 2½ years as CEO.

Brash and profane, Bartz belied the company's mainstream culture. Of course, persistent layoffs, drooping sales and flagging employee morale didn't help.

"She faced an unenviable task, both in rescuing an organization in severe distress and in trying to modernize a company that had fallen badly out of date," says Charles King, principal analyst at market researcher Pund-IT. "There have been other attempts to repolish once-shiny Internet titans, like AOL, but Bartz's experience leaves me wondering whether such projects are, by their nature, virtually doomed to failure."

To be sure, Bartz also inherited one of the biggest blunders in tech history: Yahoo's adamant refusal to accept Microsoft's takeover bid in 2008. Yahoo called the $44.6 billion offer "too low." Yahoo's current market value is $17.7 billion.

No reason was given for Bartz's sudden dismissal. Yahoo CFO Tim Morse is the interim CEO until a replacement is found, the company says.

A report in TheWall Street Journal, citing an anonymous source, said the company is for sale to the "right bidder." Yahoo had no comment.

Bartz's firing — which she disclosed in an e-mail to Yahoo employees late Tuesday after she was canned over the phone — was not shocking. Speculation swirled for months about her job security.

Tech news site TechCrunch has reported Yahoo had considered replacing Bartz with Fox Digital head Jon Miller and Yahoo board member David Kenny, president of Akamai Technologies, a cloud-computing company. Hulu CEO Jason Kilar has also been mentioned as a possible candidate. Yahoo has expressed an interest in acquiring the online-video service.

But Yahoo officials, through a spokesman, vehemently denied the reports.

Investors liked the decision to bounce Bartz. Yahoo shares rose 5% to close trading Wednesday at $13.61.

Yahoo's problems run much deeper, says David Hallerman, principal analyst at eMarketer.

Though the online display ad market is growing in the U.S. — especially in the sale of targeted ads based on unique data — Yahoo badly lags behind Facebook and Google, says Hallerman.

Yahoo is expected to ring up $1.62 billion for such ads this year, up from last year. But Facebook should top $2.1 billion this year, and Google is outpacing Yahoo's growth in terms of percentage gains, eMarketer says.

"If (Yahoo) was smaller and focused on display, it would be more profitable. Their large audience (600 million monthly unique users) isn't enough," Hallerman says.

Yahoo's problems deepened under Bartz, says Jonathan Yarmis, an independent tech analyst in New York. The company made "no strides forward in the dominant technology trends — social, mobile and cloud. And, if anything, they've lost even more ground," he says.

Ultimately, he says, Yahoo is a sales and marketing company, but Bartz wasn't a marketer and the company's board lacked marketing chops. "At least two years ago, they could try and play Google and Microsoft against each other to further their own business proposition," he says. "Now, neither of them is a real option, at least not at any interesting price."

As Yahoo's financial fortunes faltered, so did employee confidence in Bartz, who once was CEO of software maker Autodesk. According to nearly 300 Yahoo employee reviews, Bartz's approval job rating was 33% in the third quarter of this year, according to Glassdoor, a jobs-and-career website that collects data from workers about their employers. When former CEO Jerry Yang left office in 2008, he had a 43% approval rating. The average approval rating for CEOs on Glassdoor is 62%.

"It's the typical story of CEO who comes in with great promise and says the right things," Glassdoor CEO Robert Hohman says. "Very few of the promises come to fruition, and her approval rating steadily declined."