Thu, May 26, 2011
Technology > Technology

Yahoo CEO vows to clean up Alibaba mess in China(2)

2011-05-26 03:15:19 GMT2011-05-26 11:15:19(Beijing Time)

Two men talk beside a logo of Alibaba (China) Technology Co. Ltd at its headquarters on the outskirts of Hangzhou, Zhejiang province, in this file picture taken May 17, 2010.(REUTERS/Steven Shi)

Yahoo! chief executive Carol Bartz, pictured in 2009, said Wednesday that progress is being made in resolving a dispute with partner Alibaba over ownership of online payments service Alipay. (AFP/Getty Images/Justin Sullivan)

The bumbling has undercut Yahoo's revenue and stock price at a time when other major Internet companies like Google Inc., Inc. and Facebook are thriving.

"We have rolled up our sleeves and we have done the hard work that Yahoo needed to do to be positioned as a premier digital media company," Bartz said Wednesday.

Yahoo remains one of the Internet's top destinations with more than 600 million users, an audience that Bartz boasted would be the envy of once-powerful media barons such as newspaper publisher William Randolph Hearst.

But Yahoo's popularity hasn't carried over to the stock market, largely because the company has been stuck in a financial malaise for most of the past five years. During that time, Yahoo has lost nearly half of its market value under three different CEOs — Bartz, Yang and former movie studio boss Terry Semel.

Although Bartz has been able to boost Yahoo's earnings by trimming about $2.1 billion in costs, the company isn't keeping pace with the growth in the Internet ad market that generates most of its revenue.

Yahoo's net revenue — a number that reflects the money that Yahoo keeps after paying ad commissions — has dropped from the previous year in all nine quarters completed so far during Bartz's reign.

Part of the trouble stems from a disappointing start to Yahoo's Internet search partnership with Microsoft Corp. To save money, Yahoo is relying on Microsoft's technology to power the search results and accompanying ads on its website.

But Microsoft so far hasn't delivered the search advertising revenue that Yahoo envisioned, prompting the companies to delay expanding the 10-year partnership outside of the U.S. and Canada until the financial performance improves. Bartz is confident that will happen by early next year.

If Yahoo doesn't rebound soon, BGC Financial analyst Colin Gillis said he thinks Bartz might be replaced before her four-year contract expires in January 2013. He said he believes Yahoo brought in a potential successor when it named David Kenny to its board last month.

Kenny, 49, is an online advertising veteran and currently president of Internet networking services provider Akamai Technologies Inc.

Bartz has the "unequivocal support" of Yahoo's board and any speculation about her job being in jeopardy is false, according to a person familiar with the board's thinking. The person asked not to be identified because the board has chosen not to publicly discuss its feelings about Bartz's performance.

Bartz still hasn't been able to reach the goals that the board set for Yahoo's stock price when she was hired. Her contract awarded her 5 million stock options that won't vest unless Yahoo shares close at average prices ranging from $17.60 to $35.19 for at least 20 consecutive days.

It looked like Yahoo's stock might hit the first vesting threshold until the disclosure about the Alipay spinoff wiped out roughly $3 billion in shareholder wealth in two weeks.


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