Article printed from SEO-News: http://www.seo-news.com
  HTML version available at: http://www.seo-news.com/archives.html

Clouds Hang Over Yahoo and Carol Bartz
By John Sylvester (c) 2009

In June this year, Yahoo's CEO Carol Bartz said the company
sold its search business to Microsoft because, according to a
New York Times report, "Yahoo could no longer continue to match
the level of investment Google and Microsoft were making in
searching", and instead has plans to invest in the company's
display ad, content and mobile services technologies.

However, it is now praying for deliverance from the Justice
Department that antitrust regulators approve the deal. There are
also reports that the company's executives are offloading their
shares at a time when confidence in the company needs to be
bolstered. But the big question is, what would happen to Yahoo
if the deal were to be scotched?

Ms Bartz suggested in a bizarre interview that Yahoo isn't a
search engine company and denied it ever was one. She also said
that she would have sold the company to Microsoft and, when
asked what's next for Yahoo, unbelievable as it may sound, she
replied, "search isn't what we're after...I don't wake up in
the morning and say 'Gosh, what am I going to search?' That's
not what I do. I wake up and say, 'What's happening?' And
that's really what Yahoo is. We really want to be the centre of
peoples' online lives."

While it is understandable that Yahoo could no longer continue
to fund search at the levels of Google and Microsoft, the
Microsoft-Yahoo deal has stalled. According to Yahoo's
financial news site, US antitrust regulators have "requested
more documents" in their probe of the Microsoft deal to provide
search engine technology to Yahoo, with experts expecting it to
get "close scrutiny from regulators", but concluded it should
eventually be approved but that it will take months.

Although these antitrust problems exist, Microsoft says that it
is confident in its ability to persuade the regulators that more
competition in the market is a good thing and that this deal will
ensure that its race to catch up with Google has the "best
interests of the market".

Perhaps the deal is not so much in doubt, but what would happen
if the antitrust regulators fail to approve the move? It would
simply leave Yahoo, and particularly Ms Bartz, between a rock
and a hard place with no alternative in place.

On the face of it, Justice Department interest in the deal is
somewhat strange in that a merger of two companies'
technologies to compete with the market leader doesn't really
smack of antitrust. But perhaps the regulators just want to
further the probe into the effects on advertisers? Anyway, some
analysts believe the Justice Department will force both
companies to put Yahoo's search technology assets up for
auction in order for the deal to go through.

Microsoft and Yahoo representatives have also said they were
hopeful that the deal to challenge Google would close early next
year, but with Google's search market share as much as 65% of
the US market and up to 90% internationally, and with Yahoo's
about 19% in the US, the deal has a long way to go yet before it
makes any real impact.

The antitrust probe is not the only problem affecting the
company: executives are also offloading shares. With the furore
about antitrust and Yahoo's business model, it is claimed that
Carol Bartz and other Yahoo's executives have sold out their
shares. Ms Bartz sold $830,000 of Yahoo stock in March and a
further $1.4m in June, or 46% of her share options, for almost
$2 million.

All this comes on top of reports that Ms Bartz fired off an
angry internal memo after it was disclosed that Yahoo
shareholder Carl Icahn sold 12 million shares in the company. In
the memo she told employees to "get out of the sugar low – we
have work to do. Stop staring at our navels, stop arguing with
each other. Stop debate, debate, debate, and let's focus on the
competition."

And it's not just Carol Bartz and Carl Icahn who are selling
Yahoo shares. General Manager Mike Callahan also sold $1.35
million in shares the past year. As Yahoo investor Eric Jackson
of Ironfire Capital remarked: "Two million already cashed out
for Bartz is too much, too soon." He added, "it doesn't
really fit with her 'I didn't need this job as I was retired'
image she portrays".

Yahoo's response was that Ms Bartz needed the money to pay a
hefty tax bill. So, instead of building confidence in the
company at this vital time and holding on to stock, Yahoo's
shareholders get to pay her taxes. But whatever rationale is
attached to all this, it doesn't exactly make Yahoo look like a
very attractive investment at the moment.

The sale of these shares alone may well have left Yahoo's
investors wondering about Carol Bartz's long-term loyalty and
whether she still believes in the company. Maybe she cashed in
her shares before the share price dips too low? Maybe other
major shareholders will follow suit if Yahoo struggles and fails
to turn its profitability around?

When you take a look at Yahoo's finances, they are not looking
that great. The Guardian recently published, "In its latest
financial results, the company said that revenue for the past
three months was down 13% from the same period last year to
$1.5bn, while profit rose slightly to $141m...Bartz's influence
appears to have had little impact on the company's bottom line
so far..."

But doesn't this sound all too familiar? With the banks now
back to the bonus culture, thestreet.com commented on Yahoo's
executives, "...Every director and officer there seems to have
a congenital affliction that is forcing them to withdraw as much
compensation as they can from the shareholders...As a casual
observer, I'm simply galled at this pigs-at-the-trough
behaviour."

All this negative press must have Google ready to roll out the
tanks if Yahoo shows any further signs of tripping over its own
bootlaces. Unlikely, but should this merger be blocked, what
would become of the search engine company that doesn't do
search?
================================================================
John Sylvester is the media director of V9 Design & Build
(http://www.v9designbuild.com) and an expert in search engine
optimization and web marketing strategies.
================================================================

Copyright © 2009 Jayde Online, Inc.  All Rights Reserved.

SEO-News is a registered service mark of Jayde Online, Inc.