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Carol Bartz Ousted As Yahoo! CEO [Internal Memos]

The mass exodus of Yahoo! executives has reached its peak – CEO Carol Bartz has been fired by Chairman of the Board, Roy Bostock. Timothy Morse has been named interim CEO, according to a Yahoo! press release titled “Yahoo! Announces Leadership Reorganization.” Though many saw this move coming, the timing was certainly a surprise. Late Tuesday evening, Bartz sent a short note to Yahoo! employees worldwide confirming her firing:

Carol Bartz Fired - Memo

Roy Bostock, Chairman of the Yahoo! Board, said, “The Board sees enormous growth opportunities on which Yahoo! can capitalize, and our primary objective is to leverage the Company’s leadership and current business assets and platforms to execute against these opportunities. We have talented teams and tremendous resources behind them and intend to return the Company to a path of robust growth and industry-leading innovation. We are committed to exploring and evaluating possibilities and opportunities that will put Yahoo! on a trajectory for growth and innovation and deliver value to shareholders.”

Bostock continued, “On behalf of the entire Board, I want to thank Carol for her service to Yahoo! during a critical time of transition in the Company’s history, and against a very challenging macro-economic backdrop. I would also like to express the Board’s appreciation to Tim and thank him for accepting this important role. We have great confidence in his abilities and in those of the other executives who have been named to the Executive Leadership Council.”

(The internal memo sent from Jerry Yang and the Board to Yahoo! employees moments after the announcement can be read in its entirety here.)

The troubles at Yahoo! have been well-documented over the last five years, and the tune did not change under the tenure of Bartz. The revelation by Bartz that her firing was executed over the phone is symbolic of the disastrous corporate messaging and human resource mismanagement that has characterized the company of late. The company has endured one of the greatest brain drains in history, which has only accelerated its downward slide in recent years. The psychological impact of Bartz’s departure – both on investors and employees – will be intriguing to note in the coming days and weeks. Early reactions from the market are favorable – Yahoo! shares are up 5.7 percent in after-hours trading on the news.

It has been speculated that Yahoo! has been actively searching for a replacement for months. Will Yahoo! bring in another outsider or will it promote from within? There is a powerful argument to be made that the high-profile executive exodus over the last two years has left Yahoo! with no alternative but to bring in another outsider to attempt another turnaround.

Read more from the always insightful Kara Swisher at AllThingsD here.

Follow @LetsChatBiz on Twitter for more exclusive content.

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Yahoo! Search Direct Provides Richer, Faster Results

Today Yahoo! announced a new search product, Search Direct, that integrates richer content and instant results to the search experience.

Could this be the product & morale boost Yahoo! needs? It just may be. After months of public hits and high-profile executive departures, Yahoo! has taken a significant step forward in reversing the company’s downward trend. Competition from Google, Facebook, Twitter and others have put pressure on Yahoo! to release an innovative, revolutionary product to capitalize on the company’s massive Web audience.

Yahoo! Direct Search

Search Direct is clearly an effort to make Yahoo! Search more of a destination and less a sea of links. Search is about content and information discovery, and reducing the number of steps it takes to get a user from query to information is vital.

View and test Search Direct here.

Google Instant was a start – it brought links to users faster. Yahoo! Direct Search takes it one step further, providing a richer experience and faster, more comprehensive access to answers, not just links to answers. It’s early and the product is still being refined, but it has big potential.

Yahoo! Direct Search

Here is the press release from Yahoo! announcing Search Direct:

Yahoo! (NASDAQ: YHOO), the premier digital media company, today announced Search Direct, which delivers answers and direct access to websites before you complete a query, hit the search button, or go to a search results page. This search innovation supports Yahoo!’s strategy to fundamentally shift the way people experience the Web – by providing the richest, most integrated content faster and more efficiently.This new feature, currently in beta, taps into Yahoo!’s unique opportunity to combine content and structured data and to provide a rich search experience. Search Direct predicts search results as fast as a person types, character by character, and presents those results dynamically, generating a fast, simple search experience that goes beyond a list of blue links.  Search Direct rolls out in a public beta to Yahoo! users across the U.S. today, and will be available in other Yahoo! products and markets later this year.

“With today’s launch, direct answers – not the search results page – is the primary focus. We are redefining the search process and prominently displaying direct answers where search decisions are being made,” said Shashi Seth, senior vice president, Yahoo! Search and Marketplaces. “Search Direct is evidence of Yahoo! continuing to lead innovation in search, enabling people to take action faster, find what is most important, and sample what is possible with the next stage of search technology.”

With Search Direct, Yahoo! content is combined with information from the Web to provide rich answers, not just links, and to give people the option to immediately engage or continue to a traditional search results page. In this beta release, coverage includes top trending searches, movies, TV, sports teams and players, weather, local, travel, stocks, and shopping categories now available at search.yahoo.com.

·         Trending Searches – The moment the cursor hits the search box, top search trends appear and are updated every 10 minutes to display the latest and greatest search trends.

·         Search Previews – Search Direct predicts the search term as you type, providing the 10 most likely searches. You can then easily scan each option to see the related top results and find the best match for your needs.

·         Direct Answers – For many common searches, Search Direct provides instant answers before you click the Search button. Find an address or phone number, a three-day weather forecast, financial stock performance, the top trending stories at Yahoo! News, or when and where a movie is playing – all without going to a results page.

·         Direct Results – When you scan the search options and find the site you need, Search Direct provides exactly that – direct access to the site. No more overwhelming pages of links.

·         Rich Content – For all top searches about sports, top news stories, and finance, Search Direct displays rich content that only the world’s largest digital media company can provide. For example, type “n” to get the Yahoo! News display, which always shows the top two trending stories.

Yahoo! will continue to enhance and update Search Direct with new content, such as popular music and local listings.  For more information and a demo video of Search Direct from Yahoo!, visit search.yahoo.com and our company blog, Yodel Anecdotal.

Yahoo! CEO Carol Bartz

For more insight, check out the live blogs and analyses from Business Insider and All Things D.

Are the Yahoo! Layoffs a Good Sign?

It had been rumored for weeks that Yahoo! was preparing to lay off as much as 20% of its workforce, and the company had remained relatively quiet as the media battled to get an accurate figure. On Tuesday, the company confirmed that it had let go approximately 560 employees, nearly 4% of its total workforce.

Business Insider, as it has done for previous Yahoo! and AOL layoffs, set up an anonymous forum for Yahoos to share their insights, vent their frustrations, or simply to come together in an undoubtedly tough time for the company.

Nobody likes layoffs. They can place severe hardship on employees and their families that depend on their salary and benefits to subsist, and can deal an emotional blow to employees’ confidence and feelings of self-worth. The Yahoo! layoffs are no different. But is there something positive that can be gleaned from them?

Yahoo! CEO Carol Bartz

Critics have hammered Yahoo! for having an undefined mission and top executives have come under fire for not being able to answer the simple question: “What does Yahoo! do?” According to Yahoo!, the layoffs are helping the company shift its position in the market through restructuring to more successfully accomplish its short- and long-term strategic objectives.

Kara Swisher of All Things D obtained an internal memo sent to employees from Yahoo! CEO Carol Bartz, which you can read in-full here. In the memo, Bartz notes that a majority of the layoffs are in Chief Product Officer Blake Irving’s products division. Every large company has product groups that are underperforming, and eliminating these groups is a part of operating a successful business. Bartz also notes that Yahoo!’s dedication to the Microsoft Search Alliance remains strong and resources will continue to flow to the company’s key properties.

Search Alliance

Holiday layoffs are unpleasant, but with growing pressure for Bartz to deliver on her promises to turn around the Silicon Valley tech giant, they were necessary. Tech companies must be nimble, and a heavy products division hampers the innovation Yahoo! so desperately needs. Bartz has been scrutinized by some for slashing budgets and trimming jobs while taking home $47.5 million in total compensation in 2009, making her one of the highest-paid CEOs in the country.

Yahoo! asserts these layoffs were much more than a cost-cutting measure, and Bartz acknowledges that she cannot cut Yahoo! to greatness. The layoffs are part of a comprehensive restructuring initiative, and are an integral part of the process that can allow Yahoo! to focus explicitly on its core competencies in search, content verticals, and advertising.

This is no consolation for the ex-Yahoos now out of a job, but it is a good step in the re-emergence of a company that was once one of the darlings of the Valley. As for the former Yahoos, reports of a generous severance package (two months of pay, a bonus, and outplacement services) and the fortune of being in a strong hiring environment may help soothe some of the pain of being let go.

NOTE: Tech industry bretheren Mashable, Eventbrite, and others have reached out to the displaced Yahoos, encouraging them to apply for open positions.

Interactive Display Ads Are Thriving, Yahoo! is Reaping the Rewards

Online advertising spending is growing every year, and companies are looking for new, innovative tactics to reach and engage their customers. For many of the heavy-hitter ad spenders, this means premium, large, and interactive display ads. With total online advertising revenue in 2010 expected to hit $19 billion (up from $10 billion in 2004), and display advertising expected to grow 7% per year, reaching consumers through the Internet is a critical part of any advertising effort.

(LCB wrote a previous post about the future of online advertising, check it out HERE!)

Online media giant Yahoo! ($YHOO) is positioning itself to be the premier platform for high-quality display advertisements, and the company’s outlook is heavily dependent on the success of this strategy. According to JP Morgan, Yahoo! leads the display ad market with a 17% share, ahead of Microsoft (11%) and AOL (7%). The company’s CEO, Carol Bartz, has stated numerous times that she believes display advertising is an integral part of the turnaround efforts at Yahoo!, and the evidence is clearly visible on the company’s homepage (www.yahoo.com).

Yahoo!

Yahoo! presents 10 billion ads every day, and advertisers want to make each impression count. To maximize the value to advertisers and consumers, Yahoo! is facilitating a shift to large, interactive ads that allow consumers to actively engage the ad. An example below is a Lean Cuisine advertisement on the Yahoo! homepage. As you can see, the slide-out ad takes up a major portion of the above-the-fold area of the page. The ad involves a three-part “quiz” that users take, selecting food preferences to determine which new Lean Cuisine product is best suited for their taste. Not only does this engage consumers, giving them a sense of control, but it provides Lean Cuisine with a wealth of data for use in future product development.

Lean Cuisine

This specific ad is highly representative of the style of ads that companies and agencies are creating to display on the site, and the platform and strategy has been lucrative for Yahoo! In their second-quarter earnings report, the company’s profits soared 51% from the year before, largely based on the success of display advertising. As the global economy continues its recovery and earnings continue to impress, companies are likely to ramp up their advertising spending. With consumers seeking more control over their purchases, agencies are delivering opportunities for consumers to be actively involved in the the ads they see, providing increased identification between brands and customers. Display advertising continues to grow as a percentage of overall online advertising spending, and for Yahoo!, this means improved revenues and continued increases in profits.

Search Wars: The Shifting Landscape in the Battle for Your Queries

Twelve years ago, when Google was handling just 10,000 searches per day, the landscape of online search was dramatically different. While the overall growth of the search engine market accounts for a large portion of their personal growth, Google has grown notably faster than the rest of the market. As of late 2009, Google handles over 250,000,000 searches per day, and represents as much as 70% of the global market share, according to numerous reports. The company name has become synonymous with searching, entering the english language as a verb: (“If you don’t know what a SERP is, Google it!”) However, while Google has experienced explosive gains in revenue, marketshare, and activity, other search engines have not fared as well.

Yahoo! Search and Microsoft’s Bing are considered the top competitors in the global marketplace, but their respective market shares are mere fractions of Google’s. Yahoo! ranks second with approximately 18% of the global market, experiencing steady declines, while Bing accounts for just over 9% of the global market.

Bing has been pitched as a revolutionization of search, marketed to cut out the random results and provide only the most accurate results. Microsoft smartly launched a massive, wildly expensive campaign to promote Bing not as a search engine, but a “decision engine”. Based on early reports and research, the campaign had measurable impact, stealing a portion of Yahoo!’s declining market share. The outlook was still grim, however. Stacking Bing’s 10% against Google’s share of 70% doesn’t result in a feasible competition for Microsoft.

After Microsoft’s disastrous 2008 takeover bid to purchase Yahoo! for $44.6 billion (a 62% premium at the time), both companies were left with a bad taste in their mouths, and heads eventually rolled. Yahoo! founder Jerry Yang was ousted as CEO, and reverted to his role as “Chief Yahoo”, making way for the hot-headed, always-vocal Carol Bartz. With a new leader at the helm, talks between the companies reignited, but Microsoft CEO Steve Ballmer had ruled out a complete takeover. Enter the “MicroHoo” search deal.

With Carol Bartz promising only to deal Yahoo!’s search business for “boatloads of cash” upfront, the company’s stock price steadily climbed in anticipation of the deal. When the deal was announced, however, investors were initially disappointed and slightly confused. The 10-year agreement between Yahoo! and Microsoft called for an integration of Yahoo!’s search technologies into Microsoft’s existing search platforms. Microsoft absorbed a large portion of Yahoo!’s capital expenditure costs, and through their revenue sharing agreement, would provide Yahoo! with a benefit of $500 million in annual GAAP operating income.

Though investors were intially disappointed that the deal did not include the “boatloads of cash” promised by Bartz, causing Yahoo!’s stock price to drop considerably, industry experts realized that the deal provided substantial benefits for both companies. Yahoo! enjoys considerable growth in revenue, with the first 18 months of revenue per search guaranteed by Microsoft. Similarly, Microsoft will enjoy a large boost in market share, allowing the two companies to more feasibly compete with Google. Together, they represent nearly 30% of the overall search market. Many assert that 70-30 competition is much easier than 70-10 competition.

The deal is still in its early stages of implementation, but Microsoft has already begun paying Yahoo! for use of its search technologies. As the partnership matures and the full effects are understood, we may witness a powerful shift in the complexion of the search engine market. For now, however, Google remains the sole dominant force, enjoying the blessing of techies and pop-culture heavyweights alike.

What do you think about the MicroHoo deal? Legitimate competition for Google?

Get Free Press By…Interviewing the Press?

Recently, Yahoo! scored some free press when about 600 employees (including CEO Carol Bartz) turned the tables on the tech giant’s self-proclaimed “obsessive” Wall Street Journal media reporter, Kara Swisher (http://kara.allthingsd.com). The standing-room-only event was the first in the company’s new speaker series titled “Yahoo From the Outside In”, offered employees, often hounded for inside information by Swisher, and opportunity to pry into Kara’s business for a change.

Photo courtesy of AllThingsD

An event like this can not only boost employee morale and foster a better and more complete understanding of both perspectives, but it can also provide the company with some easy media coverage. After all, I’m talking about it, and you’re reading about it. In this prior post detailing how a company can promote itself for free, I touched on the idea that interacting with the press can boost awareness for the business. This isn’t exactly what I had in mind, but it’s accomplishing the same goal in an innovative manner.

For more coverage on the event and to view her original posting, visit Kara Swisher (@karaswisher) on the web at: http://kara.allthingsd.com/20100208/turning-the-tables-carol-bartz-grills-boomtown-in-the-yahoo-cafeteria-over-easy-with-a-side-of-disclosure/

As Ad Revenues Surge, Who Comes Out on Top?

During the Great Recession of the last two years, online advertising revenues dipped as much as 7%. Over the next five years, sales of online advertising are expected to more than double, led by healthy gains in search engine advertising. By the end up 2010, revenues are projected to reach nearly $19 billion, up almost $10 billion from 2004. Revenues from sponsored links and other forms of search engine advertising are expected to increase at a rate of 12% a year, whereas display ads should rise by an annual rate of 7%.

So as the online advertising market turns around, which companies are likely to capitalize on the success? Google’s heavy reliance on sponsored link and search engine advertising revenues positions them to continue to thrive in the rebound, but Yahoo!’s future is not as clear. With one year at the helm under her belt, Yahoo! CEO Carol Bartz has certainly made her mark on the company. If nothing more, she has injected intensity, energy, and a desire to return to the company’s core businesses. Employees have had mixed reactions to her management style, and it is still premature to assess the results of her tenure. Her propensity for loose-lipped conversations with the media laced with profanity and bravado have made Bartz a “love her or hate her” figure in the tech world. A benefit of these candid interactions is that the public generally has a crystal clear picture of what’s going on at Yahoo! – good or bad. In recent interviews, she noted that her company plans to focus on premium, interactive, and bold display advertising.

The pitch to advertisers is this: why spend money on a dull and unassuming text ad on a search engine or in print media when you can dazzle tens of millions viewers with a colorful, animated, and assertive display ad? When it comes to these display ads, Bartz indicated that Yahoo! is trending towards bigger and flashier. Check out this TurboTax ad on the Yahoo! homepage:

The still image of the ad is dominating enough; it takes up nearly the entire homepage screen. However, when you see the ad in action, it takes on a life of its own. In this Super Bowl and Tax Season TurboTax spot, Chris Berman’s booming voice commands attention and flashing gadgets and animations draw the viewer’s eyes to the massive ad. Beyond the size and energy, the value lies within the ad’s interactive capabilities. This “on demand” functionality hands the control and power back to the user, capturing their interest and maintaining their engagement.

We’ll likely continue to see similar ads on the Yahoo! homepage for the foreseeable future, and soon enough we will be able to gauge their effectiveness as the Great Recession becomes a painful memory – but a memory nonetheless. Carol Bartz is hedging Yahoo!’s bets on display advertising and premium content, but will the surge of search engine advertising revenues halt her efforts?

What do you think of the large display ads? Are they too obtrusive or do they better suit your online needs?

Dumping a Dog At a Loss: A Savvy Business Move?

Recently, a growing number of companies have turned to selling off some of their assets to improve their balance sheets and focus more on what they call their “core businesses”. Given the still-uncertain economic climate, these assets are often being sold at a loss. When the business being sold off is a dog, one with low market share in a low-growth market, taking a loss on the sale can be a savvy business move.

Since when is selling assets at a loss considered good business? In certain situations where the business sector is trending downward, it is better to sell at a loss while the asset still holds value. Hedging the bet that the business will rebound with the economy is an risky proposition; not every company will recover to pre-recession levels, especially businesses in boom/bust sectors. It is vitally important to analyze and evaluate the situation on a case-by-case basis. Executives must avoid falling into a recurring cycle of escalating commitment, a process during which they see a project or business failing, then inject more resources and manpower, only to see the business continue to fail, thereby prompting them to add more resources and manpower in hopes that it will eventually succeed. This dangerous cycle has brought about catastrophic failure of both businesses and careers.

To explore a real-life situation that highlights this dilemma, we can examine Yahoo!‘s sale of it’s job search/career advice business, HotJobs. In 2002, Yahoo! purchased HotJobs for approximately $436 million in cash and stock. In 2010, Yahoo! sold HotJobs to Monster for approximately $225 million, a loss on the sale of approximately $211 million. That is a big loss, no matter the size of the company. Yet analysts are still praising the sale as a positive indicator of Yahoo!’s return to the company’s early success. Why?

JP Morgan analyst Imran Kahn believes the move is indicative of Yahoo!’s return to focusing on core businesses of content, display, and search. The terms of the deal also include a multi-year traffic component, meaning Monster will enjoy the benefit of Yahoo!’s expansive reach while Yahoo! will continue to monetize its traffic and maintain the user experience, a vital part of the company’s success. Finally, Kahn believes that the $210 million loss on the sale of HotJobs was a smart move because increased competition from similar sites like Career Builder, Monster, and Dice has been dragging HotJobs down slowly (unique visitors down 32% year over year in December ’09).

This example illustrates the notion that while selling off businesses at a loss can be tough to swallow, it can have a positive impact on the business as a whole in the long run. Divisions in low-growth markets with low market share are not hot commodities to begin with, so when the opportunity arises to make money (albeit at a loss) on the sale of a business, it is a smart move to close a deal with as favorable terms as possible, as soon as possible. From there, businesses can better focus on their mission-critical activities and grow their company through those divisions.

*Information from Imran Kahn originally appeared in a Silicon Alley Insider article by Nicholas Carlson.