Microsoft‘s Bing search engine has started to become publicly available, allowing the world to decide whether the company’s latest effort has the goods to take on Google.

The engine, which replaces Live Search, debuted Thursday at the D: All Things Digital conference and is slated to be fully available by Wednesday. (Microsoft said it would start becoming publicly available Monday, but that it wouldn’t be fully launched until Wednesday.)

Among the other naming changes that go along with the new search, Live Search Cashback is now Bing Cashback, while technology from Microsoft’s Farecast acquisition now powers Bing Travel. Virtual Earth gets a name change (though not an upgrade in my book) and is now Bing Maps for Enterprise.

With Bing, Microsoft is trying to make the case that search today is still an often unsatisfying experience. That is a unique challenge for Microsoft. Although its research shows that most people repeat searches and give up without finding exactly what they are looking for, perceived satisfaction of search is actually pretty high.

To help make the case, Microsoft plans to spend (to borrow a Carol Bartz phrase) boatloads of money on advertising. Estimates in the advertising trade mags have pegged spending at $80 million to $100 million.

That’s key, since very few people currently go out of their way to search using Microsoft’s technology. Most Microsoft searches come via MSN, from toolbars and other methods, while just 1 or 2 percent come from people actually typing Live.com into their browser’s address bar.

“Nearly 98 percent of the traffic at Live.com is passive (coming from MSN, etc.) and Bing will be an attempt by Microsoft to establish its search offering as a destination Web site with high active traffic,” Collins Stewart analyst Sandeep Agarwal said in a research note on Monday. “In our view, though Microsoft’s search technologies are ready for prime time, making a call on the success of Bing now will be premature.”

One of the things I’ll be watching is how content creators react to the new ways that Microsoft pulls content into the search pages. The main results page offers the option to hover over the result for more information, while the product search site repurposes professional reviews, user reviews, and other information directly within product search results.

On the video side, Microsoft allows a live preview of videos from within its search results, also raising some questions of fair use.

Of course, other engines also borrow heavily from the sites they are searching. Don’t forget, Google hosts its own cached versions of the pages it searches.

The bigger deal, of course, is whether people take to Bing at all. Microsoft does seem to have generated a good amount of initial buzz, as well as some early positive reviews.

What’s your take on Bing? Drop me an e-mail (ina DOT fried AT cnet DOT com), along with your name and hometown, and we’ll publish some of the responses later this week.

Source: CNET News

After spending a lot of time speaking with Yahoo employees, partners, and customers, new CEO Carol Bartz has come to realize the importance of giving consumers a “Wow experience,” she told investors in the first quarter conference call. But they have yet to experience that from owning the stock. Yahoo reported a 13 percent decline in revenues for the first quarter of 2009 to $1.6 billion, while net income dropped 78 percent to $118 million.

Google, in comparison, last week reported a 3 percent decline in first quarter, but was able to manage a 9 percent increase in net income. Update: As a comment points out, Google saw a 3% decrease in revenue from Q42008 to Q12009, but saw a 6% growth year over year for Q1. Yahoo saw losses for both metrics.

Yhoo 1 Q09 Earnings Presentation Final

Diving into the numbers, search advertising revenues on Yahoo sites declined 3 percent to $399 million, while display advertising on Yahoo sites declined 13 percent to $371 million. The biggest decline, however, was from affiliate ad network revenues, which were down 16 percent to $511 million.

Page view growth also slowed down to 8 percent from 20 percent growth a year ago and 15 percent growth during the fourth quarter. On the search side, query volume grew but revenue-per-search declined as commercial queries and click-through rates saw weakness. Bartz puts a positive spin on Yahoo’s results and claims that it is actually gaining share of advertising dollars compared to the overall industry:

I think our search results, . . . it is like online window shopping, people are grazing around, just not clicking to buy. Marketing budgets have been slashed a heck of a lot more than any declines in these metrics. It is my belief that we must be gaining share.

Bartz announced another round of layoffs, which will affect 5 percent of the workforce, or about 675 people (out of 13,500). The cuts will take place within the next two weeks. Bartz also indicated during the conference call that she is focusing on the products and properties which drive the bulk of Yahoo’s traffic and revenues, including the homepage, Yahoo Sports, Yahoo News, Yahoo Finance, Yahoo Mail, and Yahoo Mobile. Her three-pronged strategy is to globalize the platform, build “fantastic products to deeply engage users, and to improve the return from its advertising platforms.

Asked about discussions with Microsoft, Bartz had no comment. Later on she did manage to drop the F-word, though (but quickly apologized for the slip).

Yahoo could start the week by launching a major reorganization of the company

Internet search giant Yahoo will likely undergo another major reshuffle sometime in the next week, as Yahoo CEO Carol Bartz is looking for several new high-level executives.  The new CEO admitted there are “fundamental issues” that must be dealt with in the coming months if Yahoo is serious about competing with Google in the future.

“Get well-rested, because next week’s a biggie,” Bartz said in a memo to employees last night according to PC World.

As the company reshuffles, it is possible that Yahoo chief technology officer, Aristotle Balogh, will also become head of product, unless Bartz is able to find someone else to run the division.  Yahoo currently has three different divisions for Europe, Asia, and emerging markets, but it is likely one executive will control all three divisions, unnamed sources reported last week.

Yahoo desperately is looking for new ways to compete with Google, which has absorbed the search engine market, while also taking advertising money away from Yahoo.  Along with search advertising control dwindling to Google, the entire display advertising market has struggled because of the recession.

Bartz took over after former CEO Jerry Yang repeatedly refused the $47.5 billion Microsoft takeover offer in 2008.  Insiders say Yang’s departure was caused by numerous issues over the years, but the mistakes made in the possible Microsoft deal proved to be the final nail in the coffin.

Several Yahoo executives left the company and joined Microsoft after the deal fell through, including Microsoft’s new online services group, along with the Larry Heck, who was Yahoo’s executive of search and advertising algorithms.

Bartz understands that there is a lot of pressure on her and the rest of the company’s executives, and it’s unlikely she’ll be given a lot of leeway to make mistakes over the next 12 months.

Source: Daily Tech

“Report” – Yahoo Inc Chief Executive Carol Bartz could announce a major management reorganization as early as next week, according to the blog AllThingsD.

The Wall Street Journal-affiliated blog, citing several sources inside and outside the Internet company, said the revamp would likely come on Wednesday, although it could be pushed out a week or two or rolled out in pieces.

Bartz sent a memo to employees on Friday in which she said, “Get well-rested, because next week’s a biggie.”

Yahoo officials declined to comment. A source at Yahoo, who was not authorized to speak publicly about the issue, said rumors of a reorganization were swirling within the company.

Yahoo, the leading provider of online display advertising, has been under pressure for nearly a year as it held fruitless merger or partnership talks with Microsoft Corp, Google Inc and Time Warner Inc’s AOL.

During that time, Yahoo lost market share in search advertising, while display ad sales have been badly hit industrywide by the U.S. recession.

The reorganization is expected to include a structure where executives like chief operating officer, chief technology officer and a new, more powerful chief marketing officer all report to Bartz, the blog said.

In addition, several sources suggested Bartz may abandon a recent restructuring that split the world into four operating regions, the blog said. Instead, one executive could head the United States and a second head up all international efforts.

Source: Reuters

A year ago Sunday, on February 1, 2008, Microsoft Chief Executive Steve Ballmer told the world his company wanted to buy Yahoo.

Despite months of discussions, the deal never materialized, distressing many Yahoo shareholders and hastening Yahoo’s replacement of CEO Jerry Yang with Carol Bartz. But what if Yang had gotten up on the other side of the bed one day a year ago and led his company to accept the offer?

It’s impossible to know what would have happened, of course. But an exercise in speculation can be illuminating, as Philip K. Dick showed with The Man In The High Castle, a novel in which Nazi Germany and imperial Japan won World War II. 

So let’s suppose that Yahoo agreed to Microsoft’s acquisition offer after bargaining Microsoft up a notch on the price tag to, say, $31 per share from the original $29.

First would have come the challenge of antitrust approval. But the Justice Department has shown itself to be more concerned with checking Google’s power, taking Microsoft’s side when it came to the ill-fated Yahoo search-advertising deal with Google.

The European Union has shown more antipathy toward Microsoft, but it, too, likely would have been spooked enough by Google’s might that it would sign off. And given that the EU is only now getting around to the issue of Microsoft bundling a Web browser with its operating system, any big compunctions about Microhoo probably wouldn’t have set in until 2015.

So Microsoft and Yahoo probably could have cleared that hurdle, but not quickly, and there are other details to reckon with, so let’s suppose that the deal closed in August. Yahoo shareholders would have received a chunk of Microsoft shares and a wad of money that looks princely in comparison with the present $11.74 value of their Yahoo shares.

Sure, there would be some bellyaching, but all those institutional investors who were publicly griping about Yahoo’s management would have been mollified–especially because revisionist history or not, the economy in August 2008 already was well on its way downhill, and Yahoo’s stock likely wouldn’t look so great.

So next up would have been the big challenge: integration, which, as former Sun Chief Executive Scott McNealy famously described it regarding the merger of Hewlett-Packard and Compaq Computer, is like watching two garbage trucks collide in slow motion.

Executives fond of competing pet projects would be pitted against each other, tooting their horns and trying to fend off others’ with candid assessments–and Yahoo already had enough internally competing projects on its own, as documented in Brad Garlinghouse’s Peanut Butter Manifesto.

But Microsoft actually saw the HP-Compaq merger as an example of how to make Microhoo happen: pick a product and go with it, rather than mess with grueling efforts to combine separate and often incompatible properties. So in all likelihood, Microsoft would have treated the acquisition with the alacrity it deserved.

Integration hell
Some parts of the Microhoo integration would have been relatively straightforward. First, top management.

Given that we’ve already rewritten history with Yang signing off on the deal, which implies that he would have gotten past any over-my-dead-body, burn-the-furniture attitude, he probably would have stuck around a year for appearances’ sake–and he’s a helpful sort of fellow who probably would have worked at least for a time to try to hand off his baby to its new parents. It wouldn’t be easy, but Yang at least already has years of experience reporting to another CEO.

So which company has the better brand online? Yahoo.

Microsoft has been hobbled by its MSN vs Live branding muddiness, and the Yahoo brand has long history of great recognition. In April 2008, Yahoo’s front page had 61 percent portal market share to MSN’s 20 percent, according to Hitwise. But brands live a long time, and with the merger only closed for a few months by now, Microsoft probably wouldn’t have had much of a chance to make big changes.

Technologically, Yahoo and Microsoft are worlds apart. Yahoo’s widespread use of open-source software and fondness for the Firefox browser would raise hackles all over Microsoft. But for the sake of expediency, and to avoid spooking the Yahoo administrators and coders who actually know how the Internet property is wired, Microsoft almost certainly would have left things stand as is for at least a year. It had already had undergone the long and painful experience switching Hotmail from Unix to Windows.

Philosophically, though, Microsoft and Yahoo are converging, partly because the Internet is only becoming more important and partly because they’re being driven in the same direction by Google’s competitive threat. Both want sophisticated online services, both want a better search site with more traffic, both want to be a hub for people’s lives on the Internet, both want to be an unavoidable part of online advertising.

Service winners and losers
The nitty-gritty of integration would have involved figuring out what to keep when the two companies had directly competing offerings. Yahoo’s got the traffic, it’s got the brand, and its services in general probably would have come out ahead.

Search would have been an obvious decision: keep Yahoo’s search engine, redirect Microsoft search traffic to it, and get the combined engineering team cracking as soon as possible. It has more volume and more advertisers. The tricky part would be migrating advertisers to Yahoo’s technology, but Microsoft would have a huge incentive to build as much critical mass as possible to try to check Google’s dominance as soon as possible.

Yahoo has another big asset: Yahoo Open Strategy. Even in the real history, YOS is only just arriving now, but even a year ago, its potential was clear: it offers Yahoo users more to do online, energizing Yahoo properties by linking them together with social activity and building them into the broader fabric of the Internet.

Yahoo took ages to retrofit its site with the Yahoo Open Strategy technology, including interfaces that can broadcast user activity such as rating a movie; delaying YOS even more by mashing it up with Microsoft’s online sites would have increased its risk of irrelevance.

With some big properties, a type of merger would be needed. With Yahoo Messenger vs. Windows Live Messenger, the companies already have done interoperability work, easing the pain of merging two largely incompatible networks into one.

The ugliest part would have been e-mail. Each company already has two options–Microsoft’s Exchange-Outlook combination for businesses and Hotmail for consumers, and Yahoo’s Zimbra for businesses and Yahoo Mail for consumers. Two e-mail offerings already are too many, and four are way too many, but e-mail is a core part of customers’ lives, and it would have been hard to move gracefully.

So by this time in the companies’ merger, users probably would see nothing different. But if Microsoft were smart, it would have determined that Yahoo Mail had the better technological underpinnings, in part because of Yahoo Open Strategy, and begun steering new sign-ups to it. Perhaps a migration tool would be released, or at least under way, for those who want to change manually.

With Yahoo part of Microsoft, one big project would look very different: the cloud-computing version of Microsoft Office, accessed via a browser. The combination of Microsoft’s existing Office customer base and Yahoo’s online customer base would have provided a much better rival to Google Docs, especially when it comes to attracting business customers who are more likely to actually pay for a reliable, supported service.

Not everything would have gone well for Yahoo projects, though. The same scrutiny that Yahoo properties are undergoing now, under the Bartz administration, would have begun months earlier and likely with less sympathetic eyes. With new bean counters in charge, Yahoo sites that didn’t pass muster would have been axed with less hesitation.

Merging in an ugly economy
And that cold calculation likely would have gotten colder because of the economy.

By the time the acquisition closed, signs of the economic troubles would be apparent. Microsoft shareholders, seeing their stake diluted and their cash reserves depleted by the acquisition, could have become a significant issue. Microsoft’s flexibility to acquire other companies, lavishly fund research with cash, or pursue other big-picture changes would have been significantly decreased.

Yahoo’s deteriorating ad revenue would have become apparent, likely spawning a collection of Monday morning quarterbacks. After all, a better time for companies to consolidate is by snapping up weaker companies more vulnerable to economic swings. Microsoft wouldn’t have been buying Yahoo at its peak, but the accountants in Redmond likely would be worrying about goodwill impairment charges.

Yahoo employees, spooked by the bad economy and Google’s continued dominance despite it, might have been happy about having a more stable employer and a better shot at taking on Google, cultural clashes notwithstanding. But the reality of layoffs would likely have swept away many feelings of security.

Yahoo and Microsoft each announced significant cuts in the real world–1,520 for Yahoo and up to 5,000 for Microsoft–because of the economy. Combined with the inevitable redundancies from the merger, the job cuts probably would have come earlier for Microhoo and might well have been followed by more, increasing the total.

Worse, that unpleasantness would have taken place before any of the fruits of the integration were visible, deepening morale issues.

So by this time in our alternate history, there would be plenty of unpleasant news. Google wouldn’t be put in its place, the benefits of the Microhoo merger wouldn’t be apparent, and the world would look very similar to today’s, minus a YHOO ticker symbol on Nasdaq. But the seeds of the merger’s fruit would be planted, and if Microsoft played its cards right, Google would be reckoning with a more formidable competitor.

Source: CNET – Posted by Stephen Shankland

Brand-new Chief Executive Carol Bartz deserves exactly zero blame or credit for the fourth-quarter financial results Yahoo will announce Tuesday afternoon, but the judgment of her abilities will begin in earnest when she bears the Internet pioneer’s tidings.

That’s because Bartz so far has spent only 20 minutes on the phone with analysts as Yahoo’s CEO, much of that spent setting a straight-talking, no-nonsense tone while avoiding any real discussion of Yahoo’s position. The post-earnings call will be her opportunity to share her first assessment of the company and any plans she has for it.

However, one source familiar with Yahoo’s plans for the call cautions against expecting some detailed recipe for turning around the company. Yahoo may have hired Bartz with relative alacrity, but the source said it’s still “way too early” for her to reveal more than a few hints at what she has in mind for the company.

Bartz has the formidable task of rebuilding Yahoo before her. Former CEO Jerry Yang worked at it for a year and a half, laying some foundations such as Yahoo Open Strategy and the Apt system for handling display ads, but Yahoo now must show progress in actually improving revenue, net income, and share price. Worse, the company must do it during a recession.

Analysts surveyed by Thomson Reuters expect gloomy news. Revenue, excluding ad commissions called traffic acquisition costs paid to publishing partners, should drop 2 percent to $1.37 billion. Earnings per share, excluding various items, are expected to drop 14 percent to 13 cents per share.

One of the big trends to check is how well Yahoo is doing with its two kinds of advertising. First is search ads, the sponsored text that appears next to search results and the market Google dominates. It was a relative bright spot in Yahoo’s third quarter, Google was relatively unaffected, and Microsoft reported its search-ad revenue grew double digits in the fourth quarter, so this could offer some modest grounds for optimism.

Second is display ads, the typically graphical variety that Yahoo relies on much more heavily. Unlike search ads, which advertisers pay Yahoo for only when users click them, display ads cost money when they’re shown. That makes it harder to attribute revenue directly to them, so advertisers who depend on a provable return on investment get cold feet faster during tough economic times.

“We think display performance will be weak, but estimates already reflect this,” said J.P. Morgan analyst Imran Khan and his colleagues in a research note Monday.

And things just get worse in the future: The outlook for the first quarter of 2009 is “likely to be poor,” Khan said. “With so much uncertainty surrounding fiscal 2009, we think advertisers will be most conservative with ad spend in the first quarter.”

Analysts, shareholders, and press won’t be the only ones looking for signals Tuesday. Yahoo employees also likely will be eager to watch the show. So far, Bartz’s internal mass communications haven’t been too revealing. The only really meaty part of a memo sent after Bartz’s first week, according to a copy posted by Kara Swisher at All Things D was this edict: “I wasn’t too happy to see some ‘inside sources’ quoting my all-hands comments to the outside press–STOP IT!”

Employees got a taste of fiscal discipline early in Bartz’s tenure: Yahoo suspended pay raises last week. Work on that plan began before Bartz arrived, but she was involved in signing off on it, according to a source familiar with the situation. Freezing salaries rarely helps morale, but neither do diminishing profitability, commercial irrelevance, and more layoffs, so the move isn’t a surprise under the circumstances.

The biggest unknown for Yahoo is the extent to which the company will go it alone. Here, again, don’t expect much guidance from Bartz yet.

Yahoo famously spurned a $33-per-share acquisition offer from Microsoft last year, and having Bartz now in charge could well facilitate some sort of Microsoft deal. But don’t bet on any news in this department Tuesday. Microsoft has moved more toward acquiring just Yahoo’s search assets, and The Wall Street Journal quoted Bartz during an employee meeting as saying her “gut” leaned against it. In any event, there are plenty of board members at Yahoo who were also disinclined last year to sell the search asset, so Bartz isn’t the sole factor.

Having the Microsoft possibilities gives Yahoo investors something of a security blanket, if not a guarantee of a big return. And Bartz’s arrival notwithstanding, some believe it’s still how the Yahoo saga will end.

“While fundamentals remain challenging for the company, the possibility of a merger or accretive deal with Microsoft keeps a floor in the stock,” said American Technology Research analyst Rob Sanderson. “We continue to believe this is the ultimate outcome.”

Source: CNET News – Posted by Stephen Shankland

Microsoft’s chief executive, Steve Ballmer, met with Yahoo chairman Roy Bostock in New York this week, according to a report in The New York Times.

The newspaper cited an unnamed source who had been briefed on the meeting, but no details of the conversation have been released.

Yahoo’s appointment of Carol Bartz as chief executive has heightened speculation that the companies may be able to agree on a takeover, with Microsoft possibly acquiring Yahoo’s search engine business.

The news follows reports of an informal conversation between Bartz and Ballmer after she was selected by Yahoo’s board.

Jerry Yang, who has stepped down as the head of Yahoo, let a deal with Microsoft fall through last year, angering many of the company’s investors.

Yahoo didn’t immediateley return a call for comment, and Microsoft declined to comment.

Source: Yahoo! & (AP)

With a new chief executive chosen from well outside its decaying orbit, Yahoo (YHOO) now has one last chance to salvage itself from a slow spiral into irrelevance. On Jan. 13, the struggling Internet icon appointed Carol Bartz, the executive chairman and former CEO of computer design software firm Autodesk (ADSK), to succeed co-founder Jerry Yang at Yahoo’s helm.In her first public statements on behalf of the company, on a brief conference call with analysts, Bartz’s no-nonsense style shone through. She noted that Yahoo is a strong company that “frankly needs a little management” and said she would take some time to talk with her staff before announcing any plans for what Yahoo should do from here on out.

For her part, Bartz will need a little educating. It’s not that most people question her management prowess or her drive to succeed amid huge obstacles. She joined Autodesk as CEO 14 years ago and almost immediately got a diagnosis of breast cancer, returning to work while still in recovery. She also joined a company where she wasn’t exactly embraced by the engineers but managed to expand the product line so Autodesk is now a $1.5 billion enterprise, while cutting costs early in the 2001 downturn to keep the business above water.

What Is Yahoo’s Niche?

Bartz, however, has no Internet or media experience, so she probably won’t change Yahoo’s direction on a dime. She’ll not only have to figure out Yahoo’s operations but also learn where Yahoo fits into a still fast-changing Internet media world. “It will likely take months for her to learn the Internet business and how Yahoo actually works before she can develop an effective new strategy,” Bernstein Research analyst Jeffrey Lindsay said in a note to clients.

Observers have no shortage of ideas for what she should do next. None of this advice, it should be said, is something Bartz has asked for outside the company. Indeed, Bartz put it in no uncertain terms that she wouldn’t be hurried before she had a chance to examine operations more closely. “Let’s give this company some friggin’ breathing room,” she declared in the conference call.

But investors, advertisers, and employees won’t give her unlimited time to decide Yahoo’s next steps. Here are five ideas that smart folks are hoping will get Yahoo back on track once and for all. Not all of them are entirely new, but they’re all more relevant than ever as Yahoo stares down restless investors, weary employees, and a declining economy that is now taking a heavy toll on Internet advertising.

• Focus, focus, focus. For the past year or so, Yang and Yahoo President Sue Decker have repeated the mantra that Yahoo aims to be the first stop online for consumers and advertisers alike. But that amorphous vision has never resonated with many people outside the company. “They need someone to lead a redefinition of where they want to be, where their strengths are,” says Bill Coleman, CEO of software maker Cassatt and a former colleague of Bartz at Sun Microsystems (JAVA).

Management will also need to end debate over whether Yahoo is a tech company or a media company, as many analysts and investors keep wondering. It simply has to be both, just as successful companies such as Google (GOOG) and Amazon.com (AMZN) are. The bigger imperative is to define what makes Yahoo special.

More than anything, Yahoo’s uniqueness lies in its unmatched collection of curated media properties, from Finance to Sports, that have large, loyal, and distinct audiences that advertisers still love. That message has gotten lost in Yahoo’s fitful attempts to be a search engine, a social network, and other flavors of the month. And Yahoo’s leadership needs to focus on more than just message, but also make hard decisions about what not to do anymore—perhaps its international operations, maybe even search. “We expect Yahoo to reduce the number of operations it has” to focus on what it does best, says Scott Kessler, an analyst at Standard & Poor’s, which, like BusinessWeek, is a unit of The McGraw-Hill Cos. (MHP).

• Nuke the current management structure once and for all. Although former CEO Terry Semel was credited with turning Yahoo around in its youth, he helped create a “matrix” management system that required ideas to be vetted by many managers, slowing new services and making few people truly accountable for particular projects. Despite repeated vows to get rid of the matrix and constant reorganizations of management, that hasn’t happened. “They need one person in charge to coordinate what they do,” says Autodesk CEO Carl Bass.

And Bass and others think that’s precisely what Bartz can do. “She has a forceful ability to make decisions, and that’s a talent Yahoo needs,” says Neil Sims, managing director at the executive search firm Boyden Global Executive Search.

• Free the techies. There are still many talented engineers and programmers among Yahoo’s more than 10,000 employees. Many frequently mention being shackled by that pesky management structure, which is true enough. But at the same time, engineers always need focus, and nowhere more than at Yahoo. Too many times they’ve come up with services, such as the Yahoo 360 social network, that look cool but go nowhere because they don’t work as well as simpler services, such as Facebook. At Autodesk, Bartz “got various engineering groups to work together,” says Gartner (IT) analyst Allen Weiner. “She brings adult supervision to Yahoo.”

• Dial up Microsoft CEO Steve Ballmer to talk about a deal. No, not for the whole company. That’s not going to happen because Microsoft no longer wants to do it, and Yahoo will never sell out for anything close to its current stock price. Nor, in some people’s estimation, is selling off the search business a great idea. Yahoo would be unwise to sever search, given the growing, potentially lucrative connections between search advertising and the display variety that are Yahoo’s strength. Rivals Google and Microsoft (MSFT) are busily devising ways to tap those connections better.

A better choice, says S&P’s Kessler, would be to forge a joint venture that combines Yahoo’s and Microsoft’s search businesses into one but gives both a stake in the operation. This is something others, such as Silicon Alley Insider’s Henry Blodget, have been advocating for a long time, too. The advantages: no huge cash outlay, no huge integration issues, and a Yahoo board likely to be much more open to such a deal.

• Nail the next generation of online display advertising. APT, Yahoo’s latest attempt to automate the placement of display ads, is a start, but it hasn’t yet come close to the ease of placing search ads. Because Yahoo is the clear leader in display ads, and advertisers clearly want it to succeed to provide richer venues for their marketing messages, it’s in a unique position to be the leader.

Indeed, the entire advertising industry is desperately looking for what new ad formats will give them a way to do branding as effectively as Google’s ads work for direct-response marketing. No one yet has sure answers. But if anyone can come up with them, it should be Yahoo, whose considerable experience in search, banner, and video ads—combined with unmatched relationships with advertisers and agencies—gives it a golden opportunity. Bartz must figure out how to seize it. One promising avenue: Corral Yahoo’s many social networking efforts into something more coherent that will provide a way for marketers to forge deeper connections with consumers—in other words, steal a march on Facebook.

No doubt the new CEO will have her own ideas. And no doubt investors weary of Yahoo’s struggles will welcome almost anything Bartz does that changes the status quo. “Given the recent stagnation at Yahoo, we think almost any movement from here will be forward,” says UBS Investment Research (UBS) analyst Ben Schachter in a note to investors. But Bartz will have to move quickly to keep Yahoo from falling further behind.

Source: BusinessWeek – By Robert D. Hof

Yahoo Inc’s (YHOO.O) new CEO is a straight-shooting, tough-talking technology veteran but she is seen lacking two qualifications investors hoped for most: deal-making savvy and Web business know-how.

Carol Bartz was appointed to the top job at Yahoo on Tuesday after a two-month search, and brings with her a strong track record of revenue growth at software company Autodesk Inc (ADSK.O), where she was chief executive from 1992 to 2006 and still remains executive chairman.Bartz, however, does not have an established reputation as a deal-maker and Yahoo investors regarded her appointment skeptically, with shares of the Internet search and advertising company dropping more than 3 percent during the trading day.

“People respect her. She is direct and focused, but not mean-spirited like a ‘Chainsaw Al’ type of person,” said Needham & Co analyst Richard Davis, who covered Autodesk when Bartz was at its helm.

She is credited with increasing Autodesk’s revenue from $285 million to $1.5 billion during her 14-year tenure, as well as diversifying its business. Bartz, 60, built the company by buying small and medium-sized businesses, including a $444 million buyout of Discreet Logic in 1999.

“She seems to me to be more of a builder than a buyer-and-flipper,” Davis said. “I’m sure that plenty of people wanted to buy Autodesk over the years.”

Analysts lauded her for being a dextrous, capable and committed executive, but said that without any experience in the Internet sector, she would likely find it daunting to turn around Yahoo, which is a distant second to Google Inc (GOOG.O) in the search advertising market.

Bartz will be under immediate pressure from investors, who have seen the value of their shares nosedive in the past year, to re-open talks with Microsoft Corp (MSFT.O) and secure a sale of the company at a healthy premium. The software maker has shown no interest in reviving its $47.5 billion takeover bid.

Bartz herself welcomed the challenge during her first conference call as Yahoo CEO, saying she wouldn’t have accepted the offer if she didn’t think a turnaround was possible.

“I just see this company as a company with enormous assets that frankly could use a little management, and I love leading, love managing, love making decisions,” she said.

She added that she would address questions of whether Yahoo should look for a search partnership, divest assets and find new ways to cut costs later, after she had spent some time understanding the company.

DEAL OR NO DEAL

Collins Stewart analyst Sandeep Aggrawal said Microsoft could see Bartz’s appointment as an opportunity to make a fresh proposal for Yahoo.

“Yahoo probably needed a CEO who was going to favor this deal,” Aggrawal said. “We were never really sure whether Jerry Yang wanted to do this (Microsoft search) deal or not.”

Yahoo co-founder Jerry Yang agreed to step down from his CEO post in November after drawing investor ire for failing to strike a deal with Microsoft.

Although Bartz was mum on Microsoft on her first day, some analysts wondered if her appointment itself was a message to the market that Yahoo wants a CEO who can focus on the company’s growth strategy rather than sale.

“The selection of Bartz is a declarative statement for Yahoo, that ‘we are not for sale’,” said Neil Sims, a managing director at executive search firm Boyden’s technology practice group. “She doesn’t have the M&A dealmaker profile you’d expect Yahoo to select if (selling) was their overt intention.”

Analysts also wondered whether Bartz’s lack of media industry experience would be a stumbling block when it comes to transforming Yahoo.

“The Yahoo brand is very muddled and complicated and confusing,” said Sims, who has done executive search work for Yahoo. “The company is a cobbled-together association of fiefdoms, and within those business units and predecessor companies are strong personalities with agendas.”

Bartz’s lack of industry insight could make managing the company that much tougher, he added.

But Bartz refuted the notion that it would be tough for her to run Yahoo’s online media properties because most of her experience is in the technology industry.

“I didn’t know CAD (computer-aided design) when I joined Autodesk, I didn’t know hardware when I joined Sun,” she said. “I am a technology person, I am a market-driven person, I love customers. So I suspect I have a little brainpower to learn what it takes to understand media.”

Source: Reuters