Yahoo's Bartz on Microsoft, engineering, and ads

Yahoo CEO Carol Bartz kibitzed with a luncheon of Wall Street analysts Wednesday as part of a free-wheeling discussion of Yahoo's past sins and future opportunities.

Yahoo CEO Carol Bartz

(Credit: Yahoo)

At the Bank of America Merrill Lynch U.S. Technology Conference, analyst Justin Post noted the "much more open policy" that Yahoo has implemented with regard to the financial world since Bartz's arrival at Yahoo, and that openness definitely applies to Bartz's willingness to candidly discuss Yahoo's situation regarding Google, Microsoft.

Bartz let fly with a few of her trademark zingers, but otherwise had little new to say about Yahoo that hadn't already been covered at events like last week's D: All Things Digital conference or Yahoo earnings calls. Nonetheless, here's a selection of Bartzisms that shed a little more light on Yahoo's efforts during her first six months on the job:

• "Yahoo is swimming in tchotchkes. If I see another T-shirt I'm going to throw up." Bartz came to Yahoo with a reputation as a slash-and-burn cost cutter from her days at Autodesk. She is indeed trying to tighten spending on what she called "discretionary" items such as yet another purple T-shirt, but said that Yahoo will continue to spend quite a bit of money on IT needed to keep its sites up and running.

• "Yahoo has way too much infrastructure. For everything you can do in three steps, Yahoo does it in 22." Along those lines, a lot of the cutting Bartz has tried to implement has more to do with processes and sites that had basically been "abandoned," she said. Some Yahoo properties that were launched during the previous regime stagnated, and therefore gave off a poor impression of Yahoo to a visitor that stumbled upon them. Cleaning up Yahoo's myriad properties--in a much faster way than currently possible--seems like a priority for Bartz.

• "We're not a search company." Bartz has previously said that search is an important part of Yahoo, but seems to think that the hoopla over Yahoo's search position between Google and Microsoft distracts from what Yahoo is all about. Ninety-eight percent of Yahoo's searches come from people who are already on the site, she said. That means Yahoo has to keep finding ways to bring in users to its content sites--such as sports, finance, and local news--and let searches conducted by those additional users drive its ad business rather than fighting the external search branding issue against Google, as Microsoft is trying to do with its new Bing search engine.

A revamped home page coming "later this fall" will help, Bartz said. One feature of that home page will involve getting Twitter messages right onto the page; "everything is flowing in, and we help you flow out."

• "An extroverted engineer looks at your shoes when they are talking to you." Bartz got her biggest laugh of the day with an old joke about engineers, and how she prefers spending time out making sales calls with Yahoo's sales force. This is a key area of differentiation for Yahoo: it says it wants to focus on "high-touch" sales, rather than the algorithmic model that prints money for Google.

The hope is that Yahoo can translate its strength in display advertising to lure revenue from chief marketing officers at big companies thinking about moving a chunk of their advertising spending from television to the Web. For those folks, "your brand is not defined by 20 keywords. You have to put a persona out there," she said, referring to the need for display and/or video advertising. In order to do win that business, however, Yahoo has to take a lot of "friction" out of the Internet ad sales process that just isn't there in the television business.

• "This is like me trying to buy Office from Steve. This is not a minor issue." Bartz handled the inevitable questions about Yahoo's on-again, off-again romance with Microsoft by recognizing that while there are some compelling opportunities if Yahoo and Microsoft were to enter into a search partnership, there are more than a few issues, as well.

"Do we trust them to do the technology right? Would we save money?" she wondered. Bartz thought offloading Yahoo's search business would save about $500 million--far less than analysts had estimated--including data-center and employee costs, but there would be lost revenue to factor in, of course.

Microsoft's motivation, however, is clear, at least as Bartz sees it. "They have Google envy, and they really have to stop that money machine because that money machine is coming back on desktop apps."

[FutureGuy]

Yahoo will have a tough time competing with Google and MS on search. They will keep losing market share and their search business will be worth less and less to anyone including MS.

[Super2online]

Yahoo is in a very poor position, just as Kmart was sandwiched between Walmart and Target. They are going to have to reevaluate what they are trying to accomplish and focus on it like a laser immediately.

[BogusBasin]

Rest in Peace Yahoo.

Amen

[t8]

I remember when Yahoo gave me the lion share of traffic to my site. Now it is Google that provides this.

[jtjt145]

Micro$oft is a sinking ship, so independence from them should be crucial.

[Vegaman_Dan]

In as much as you can call the USS Enterprise to be sinking, I suppose that could be true... I think the US Navy would take exception to that notion however.

[t8]

Yahoo should concede search to Google and sell it to Microsoft. They should then continue to purchase Web properties that have a lot of traffic. At this point, they will be able to go into an ad partnership with Google because they are no longer in search.

If they don't, then their search will increase it's losses and they will end up with Web properties that have lots of traffic anyway, and they will not be allowed to partner with Google on ads because of their search engine and hence less monetization of these properties.

[flickrz]

Bartz is partially right. She knows that MSFT isn't going to be able to beat google by its own. Sooner rather than later (may be down the road 3-5 years from now) they will either concede or come back with an offer that yahoo share holders can't resist. She is just playing hard to get. The big assumption is that the Yahoo would be able to hold on to its share that long. And, as far as selling yahoo search is concerned; it makes tons of money for Yahoo!. It, along with display ad business generates the majority of revenue and profits. Even if we consider that to be 30-70 ration between search and display that is a lot. And, as per last quarterly call; search is the only reason they were able to post smaller loss.

[OlsonBW]

If they could come up with a web search that gives me the results that *** I *** want instead of what companies pay them to put in the results. I don't care if I get 20 million hits for my search if only two of them are valid to me. And those two aren't always on the first page as they should be when they are the only two that actually has ALL the search words I put in and doesn't have any that I don't it not to find (with the - sign).

[ralphtyler]

I recently decided to cancel my premium mail service with yahoo, as google mail was better, and free.

In order to cancel my yahoo service, I had to use the phone, i.e., there was no way to do it online.

Pretty ironic.

As a retired software developer in Santa Clara and from headlines, I can guess that Yahoo is becoming the kind of company that developers really hate. If the developers are unhappy Yahoo will fail. I don't care how many Top Guns Carol Bartz hires.

The best outcome for Yahoo would be a merger with Microsoft.