Digital Trends
Now the search deal between Microsoft and Yahoo has been signed, the fallout begins.
In a conference call that also featured Yahoo head Carol Bartz, Microsoft chief executive Steve Ballmer warned that Google is likely to try and block the partnership as the deal is scrutinized by lawmakers. He said:
"We suspect we will face opposition from the competitor [Google]. The case of us coming together will provide more competition, not less. [However] we expect our competitor to be aggressive."
It’s been well over a week since reports came out that Microsoft and Yahoo were very close to a search deal. Since then there’s been very little said.
But now the companies have announced that the deal is done and signed, ending more than a year an a half of on-again, off-again dancing. It’s set to last for 10 years, Microsoft head Steve Ballmer said:
"Through this agreement with Yahoo, we will create more innovation in search, better value for advertisers, and real consumer choice in a market currently dominated by a single company."
Even as it’s in talks for Microsoft to buy its search advertising business, Yahoo revealed yesterday that its revenue was search ads had dropped by 15% in the most recent business quarter.
That was higher than the 14% fall in the company’s display ad revenue.
But company head Carol Bartz was quick to dismiss any notions that Yahoo had lost ground in search, saying that “our search volume is holding fine,” and placing blame for the revenue decline on “fewer click-throughs and fewer buyer intents.”
Yahoo has come out with its figures for the first quarter of 2009, and although the drop-off in advertising has taken its toll, the numbers aren’t as bad as many imagined.
Revenue dropped 13% to $1.58 billion, but if allowances are made for fluctuations in exchange rates, that drops to 8%. The company also blamed other factors, namely the sale of Kelkoo, along with lower fees from other sources, including VoIP and music subscriptions, for the drop. But cash flow of $409 million exceeded the midpoint of the outlook range provided by the company last quarter.
Yahoo chief executive Carol Bartz met with Microsoft head Steve Ballmer last week, according to a report in All Things Digital. However, this time the talk wasn’t of acquisition, but partnership. Negotiations had supposedly begun several weeks ago.
Citing “a variety of sources” the report says the talk were “preliminary and wide ranging,” looking at a partnership in search and advertising.
Bartz has already indicated she’s not likely to be pressured into selling off assets, but a partnership would make sense for both parties, given Google’s massive dominance in the search market.
Since becoming chief executive at Yahoo, Carol Bartz has been keeping a low profile. But it seems she’s been looking around the company, and now she’s had time to study it, she’s started to make some changes. In a blog post, she said she’s undertaken "a whirlwind tour for the last six weeks" and now she’s "rolling out a new management structure that I believe will make Yahoo! a lot faster on its feet".
Gone is CFO Blake Jorgensen, who’s resigned, along with Marco Boerries, boss of Yahoo Connected Life, most of whose division becomes Yahoo Mobile, while Elisa Steele, from NetApp, will come on board as chief marketing officer.
2008 wasn’t good to Yahoo, what with fending off a Microsoft takeover, shareholder rebellions, and an aborted alliance with Google. And it hasn’t ended well. As Yahoo revealed its figures, it announced that during the fourth quarter it went into the red, to the tune of $303 million.
However, although new chief executive Carol Bartz was adamant that the company needed to streamline more, and devise better strategies, she was adamant in one pronouncement:
"I didn’t come here to sell the company."
During the quarter Yahoo eliminated 1,600 positions, took a heavy charge on its international operations, and had one-off costs of over $600 million.
Yahoo has a new chief executive as Carol Bartz replaces Jerry Yang, but it’s now looking for a new president. In the wake of the appointment, Sue Decker announced she’d be resigning from the post as soon as a replacement can be found.
Decker, who served as president under Yang and his predecessor Terry Semel, was believed to be a candidate for the chief executive post at one point, according to Vnunet. However, her loyalty to her boss might have cost her that chance in the wake of the Microsoft acquisition fiasco.
Yahoo chairman Ray Bostock said:
The king is dead, long live the…queen. Yes, after a search, Yahoo has named a woman, Carol Bartz, to replace company co-founder Jerry Yang, who’s stepping down as chief executive after a year of controversy.
It was Yang who turned down Microsoft’s takeover offer of $47.5 billion, worth $33 a share, only to see the price of Yahoo stock tumble to $12. Although Microsoft did return with an offer to buy Yahoo search, no offer has been struck.
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