New Yahoo CEO lacks Web and deal-making skills

Yahoo's new CEO is a straight-shooting, tough-talking technology veteran but she is seen lacking two qualifications investors hoped for most: deal-making savvy and Web business know-how.

Carol Bartz was appointed to the top job at Yahoo yesterday after a two-month search, and brings with her a strong track record of revenue growth at software company Autodesk Inc, where she was chief executive from 1992 to 2006 and still remains executive chairman.

Bartz, however, does not have an established reputation as a deal-maker and Yahoo investors regarded her appointment sceptically, with shares of the Internet search and advertising company dropping more than 3 per cent during the trading day.

"People respect her. She is direct and focussed, but not mean-spirited like a 'Chainsaw Al' type of person," said Needham & Co analyst Richard Davis, who covered Autodesk when Bartz was at its helm.

She is credited with increasing Autodesk's revenue from $285 million (£195.5 million) to $1.5 billion during her 14-year tenure, as well as diversifying its business. Bartz, 60, built the company by buying small and medium-sized businesses, including a $444 million buyout of Discreet Logic in 1999.

"She seems to me to be more of a builder than a buyer-and-flipper," Davis said. "I'm sure that plenty of people wanted to buy Autodesk over the years."

Analysts lauded her for being a dextrous, capable and committed executive, but said that without any experience in the Internet sector, she would likely find it daunting to turn around Yahoo, which is a distant second to Google Inc in the search advertising market.

Bartz will be under immediate pressure from investors, who have seen the value of their shares nosedive in the past year, to re-open talks with Microsoft Corp and secure a sale of the company at a healthy premium. The software maker has shown no interest in reviving its $47.5 billion takeover bid.

Bartz herself welcomed the challenge during her first conference call as Yahoo CEO, saying she wouldn't have accepted the offer if she didn't think a turnaround was possible.

"I just see this company as a company with enormous assets that frankly could use a little management, and I love leading, love managing, love making decisions," she said.

She added that she would address questions of whether Yahoo should look for a search partnership, divest assets and find new ways to cut costs later, after she had spent some time understanding the company.

Deal or no deal

Collins Stewart analyst Sandeep Aggrawal said Microsoft could see Bartz's appointment as an opportunity to make a fresh proposal for Yahoo.

"Yahoo probably needed a CEO who was going to favour this deal," Aggrawal said. "We were never really sure whether Jerry Yang wanted to do this (Microsoft search) deal or not."

Yahoo co-founder Jerry Yang agreed to step down from his CEO post in November after drawing investor ire for failing to strike a deal with Microsoft.

Although Bartz was mum on Microsoft on her first day, some analysts wondered if her appointment itself was a message to the market that Yahoo wants a CEO who can focus on the company's growth strategy rather than sale.

"The selection of Bartz is a declarative statement for Yahoo, that 'we are not for sale'," said Neil Sims, a managing director at executive search firm Boyden's technology practice group. "She doesn't have the M&A dealmaker profile you'd expect Yahoo to select if (selling) was their overt intention."

Analysts also wondered whether Bartz's lack of media industry experience would be a stumbling block when it comes to transforming Yahoo.

"The Yahoo brand is very muddled and complicated and confusing," said Sims, who has done executive search work for Yahoo. "The company is a cobbled-together association of fiefdoms, and within those business units and predecessor companies are strong personalities with agendas."

Bartz's lack of industry insight could make managing the company that much tougher, he added.

But Bartz refuted the notion that it would be tough for her to run Yahoo's online media properties because most of her experience is in the technology industry.

"I didn't know CAD (computer-aided design) when I joined Autodesk, I didn't know hardware when I joined Sun," she said. "I am a technology person, I am a market-driven person, I love customers. So I suspect I have a little brainpower to learn what it takes to understand media."