JOIN USThe 60-year-old executive has moved swiftly to rebuild the Internet company to her specifications, upending organisational structure, replacing executives and cutting costs including 5 per cent of workforce.
Analysts say that is exactly the kind of shake-up needed at Yahoo, which has seen its sales growth slow and its market share overtaken by Google Inc in recent years.
For Yahoo’s ranks, still shell-shocked from deep cuts in 2008 — including 1,600 axed jobs — the hope that Bartz brings is increasingly mixed with a dose of fear and uncertainty. Yet broad support remains for Bartz despite tough talk, cancelled holiday parties and forced vacations that have come to define her era. “We are all sort of wanting to believe in her because we really want to see Yahoo turned around,” said one Yahoo insider. “But it still doesn’t make it any less scary when you don’t hear about what’s coming up.” With new round of layoffs under way, and steady stream of Yahoo sites getting axed, anxiety within ranks has been exacerbated by growing sense of secrecy.
Media gag
Bartz’ famous penchant for tight lips, which showed in her emphatic displeasure toward news leaks, is increasingly evident in other aspects of Yahoo’s operations. The informal flow of information has come to a halt. “Everything is on need to know basis,” Yahoo source said. Bartz has taken steps to keep employees in the loop with weekly emails about her activities and changes at the company. But communiques don’t always provide the full picture.
Decisions to shutter parts of business such as GeoCities, which Yahoo acquired for more than $4 billion in 1999, have not been announced.
Some employees worry that their project will be next. “If your property is not making a lot of money, or making small amount of money, you know you should be looking over your shoulder because you could be the next person to get that tap,” said a Yahoo employee. Yahoo is hardly alone in cutting costs and underperforming assets in the weak economy. Even Google, which has weathered the recession better than any of its peers, has had three rounds of layoffs this year.
Discipline & accountability
Employees credit Bartz with imposing much-needed discipline and accountability on a company long suffering from a lack of urgency and unified purpose.
The key to Yahoo’s future, say observers, will be what Bartz does next. About two-thirds of corporate turnaround efforts overall are unsuccessful, primarily because they don’t evolve beyond cost cuts, said McKinsey & Co consultant Warren Strickland.
“You don’t want to get in this spiral of cut, cut, cut, because people wind up de-motivated,” said Strickland.
“So even if you have to start that way, because it’s a bad situation, sooner rather than later, it’s good to say how we’re going to take back market share.” Bartz has yet to offer details about her broader strategic vision, other than to flag Yahoo homepage, Yahoo email and a few other properties as “core” to the company’s future. And fate of Yahoo’s search business remains unclear, with Bartz having recently met with Microsoft CEO Steve Ballmer about potential partnership.
Yahoo faces a tough field of rivals, from Internet search powerhouse Google to social networking firms like Facebook, which increasingly compete with Yahoo for Web surfers’ leisure time. While Yahoo owns some of Internet’s most popular real estate, people inside and outside are still waiting for the plans to return to growth in the new Web landscape.
Analysts say Yahoo’s main weak spot is social networking, with it needing to get in the game through partnership or acquisition, although Yahoo is moving forward with its own efforts to infuse social elements into its network of sites. Analysts say Bartz has another two or three quarters of good grace with Wall Street before she needs to show results.