Yahoo shares up after Bartz sacked

Chairman Roy Bostock fired Carol Bartz over the phone on Tuesday, ending a tumultuous tenure marked by stagnation and a rift with Chinese partner Alibaba.

Shares in Yahoo jumped 6 per cent in after-hours trading following the news. But traders pointed out they were still trading at levels that were scarcely higher than when Bartz first took the reins in January 2009 with hopes of reviving stalled growth and competing with up-and-coming rivals.

Her departure caps a decade-long fall from grace for a company whose shares traded at more than $125 (£78) in January 2000 during the dotcom boom.

Yahoo is still one of the most popular destinations on the internet, but faces increasing competition from social networking site Facebook and from Google, which has a market value of $170 billion (£106bn), ten times more than Yahoo.

Facebook is expected to overtake Yahoo this year to collect the biggest slice of online display advertising dollars in the US.

Some analysts said Bartz’s departure signalled the company had run out of options after failing to dominate the advertising and content markets and handing over its search operations to Microsoft.

Michael Yoshikami, chief executive of investment firm YCMNet Advisers, said Yahoo might be “ripe for a takeover”.

“It’s hard to say what direction they are going to head in,” he said. “They went down the road of search, they went down the road of media, becoming a content company, they went down the road of advertising. I’m not sure where they go right now.”

The decision to oust Bartz was reached by a unanimous vote of Yahoo’s eight independent directors late last week, according to a person close to the company. Bartz, and company founder Jerry Yang, who are also on the board, did not participate in the vote.

Chief financial officer Tim Morse will step up to the top job on an interim basis, while the company searches for a permanent leader.

Yahoo said a new executive leadership council would help Morse in managing day-to-day operations as well as supporting “a comprehensive strategic review” to position the company for growth.

Yahoo is worth about $16bn, with much of that ascribed to its roughly 40 per cent stake in China’s Alibaba, the parent company of websites including Alibaba.com and Taobao.

Relations between Yahoo and Alibaba have soured since Bartz took over, with Alibaba founder Jack Ma failing in an attempt to buy out his US partner’s stake.

A senior official at Alibaba Group said Bartz’s departure was unlikely to solve the ownership issues.

Yahoo also owns a stake in Yahoo Japan, along with Japanese mobile company Softbank. Analysts estimate Yahoo’s Asian assets are worth between $7 and $9 of its share price.