Case 12
More than two years after the board of Yahoo hired Carol A. Bartz as chief executive to apply a little shock therapy to the ailing Web portal, the firm appears to be still suf-fering from many of the same symptoms. Its revenues and profits remain relatively stagnant, its market share has remained low, and there still continues to be a shortage of innovation (see Exhibits 1 and 2). Most analysts feel that her turnaround plan has failed to generate any significant results so far, prompting skepticism that she may not have been well suited for the job. "She's been there long enough that you have to question her ability to have the impact that's needed," said Lou A. Kerner, an analyst with Wed-bush Securities.1
This case was developed by Professor Jamal Shamsie, Michigan State :diversity, with the assistance of Professor Alan B. Eisner, Pace University. Material has been drawn from published sources to be used for class -'...:scussion. Copyright ©' 2011 Jamal Shamsie and Alan B. Eisner.
Bartz has long warned that reviving Yahoo would take some time. Shortly after she took charge in January 2009, Bartz had warned that she would be trying to reverse a slide that has been years in the making, one that ana-lysts say was caused by a slow decision-making process that allowed new competitors to capitalize on the vari-ous emerging trends among Internet users. During her two years at the head of Yahoo, Bartz has made substan-tial changes to the organization, including a shuffling of top executives. She has also tried to refocus the firm on its strengths in content areas such as news, sports, and finance and on other popular services, such as e-mail and instant messaging. Many other forms of services which were no lon-ger considered to be central to the firm's strategy, such as personals, job listings, and real estate have been out-sourced and are now largely handled by third parties. By far, Bartz's biggest move has been handing over its search
Exhibit 1 Yahoo! Income Statement (in thousands of U.S. dollars)
Dec. 31, 2010 Dec. 31, 2009 Dec. 31, 2008 Total Revenue 6,324,651 6,460,315 7,208,502 Cost of Revenue 2,627,545 2,871,746 3,023,362 Gross Profit 3,697,106 3,588,569 4,185,140 Operating Expenses: Research Development 1,082,176 1,210,168 1,221,787 Selling General and Administrative 1,752,823 1,825,702 2,268,449 Nonrecurring 57,957 126,901 594,391 Others 31,626 39,106 87,550 Total Operating Expenses 2,924,582 3,201,877 4,172,177 Operating Income or Loss 772,524 386,692 12,963 Income from Continuing Operations: Total Other Income/Expenses Net 297,869 187,528 82,838 Earnings before Interest and Taxes 1,070,393 574,220 95,801 Income before Tax 1,070,393 574,220 95,801 Income Tax Expense 221,523 219,321 262,717 Minority Interest (12,965) (7,297) (5,765) Net Income from Continuing Operations 1,231,663 597,992 424,298 Net Income 1,231,663 597,992 424,298
Source: Yahoo!.
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