Yahoo Chief Defends Her Site, Strategy

online.wsj.com

By SCOTT MORRISON

Bloomberg

Yahoo CEO Carol Bartz, shown in May, said, 'We're not going away. This is not a decaying asset.'

Yahoo Inc. CEO Carol Bartz faced shareholders at the company's annual meeting Thursday—18 months into her effort to turn around an unfocused Internet giant eclipsed by Google Inc. and left battered by Microsoft Corp.'s failed takeover attempt.

Yahoo shares have risen about 20% since she took over, but some investors still question whether Ms. Bartz can execute her vision.

One of her biggest moves so far: a 10-year revenue-sharing search pact struck last July with Microsoft, whose Bing engine will power searches on Yahoo's pages, freeing Yahoo to focus on improving its core display-advertising business and beefing up content on key Web properties.

Analysts are concerned Yahoo lacks a viable mobile strategy, an emerging market in which Apple Inc. and Google are staking their claims. Yahoo is also losing ground to social networking. Market research shows people are spending less time on Yahoo as they shift to Facebook Inc.

Famous for her colorful language, Ms. Bartz sat down for a recent interview and didn't swear once.

Excerpts:

WSJ: Your rivals are moving aggressively. Does Yahoo have a limited amount of time to effect a turnaround?

Ms. Bartz: When you talk about rivals, the big three on the Internet are Facebook, Google and Yahoo. People come to us for three different things.

We're not going away. This is not a decaying asset. Yahoo serves about 600 million people a month on the Internet. We are the number one or two site [based on time spent].

WSJ: Analysts are concerned about Yahoo's mobile strategy.

Ms. Bartz: Yahoo's strategy is to make its content as widely available on as many devices as possible and then we can advertise against that.

WSJ: But critics say Yahoo is not being aggressive enough about getting its content onto smartphone platforms like Apple's iPhone and Google's Android.

Ms. Bartz: I think that's true. We should do more. Our Android [apps are] going to come out this summer. We were one of the first with an iPad app and we are going to have an amazing mail app on both the iPhone and the iPad. You know what I'm worried about? iPad apps. I'm worried about getting our content on [the iPad] because the content will bring the advertising.

I wouldn't count out Nokia [Yahoo's software will soon power email and chat services on most Nokia phones]. Nokia has [a large share] of the phone business outside of the U.S. Not everybody in India is running around with an iPhone.

WSJ: By doing this deal with Nokia, aren't you going after a user base that you have struggled to monetize?

Ms Bartz: We're trying to get user growth in Asia. Monetization is not number one in Asia, it's user growth. What is Facebook doing? They are getting users. They will monetize later.

WSJ: Google is worried that Apple's new terms for its iPhone and iPad advertising platform could keep large competitors from serving ads on those devices. Are you concerned that Steve Jobs is trying to crimp competition?

Ms Bartz: At this point I don't. He is trying to make sure the quality of ads on his products stays high. The last thing you need on that beautiful iPad [is to] see an ad for Russian brides or teeth whitening.

WSJ: You famously declared last year that you would be open to a search deal with Microsoft if they offered "boatloads of money," reinforcing the expectation on Wall Street that there would be a big upfront payment from Microsoft.

Ms. Bartz: It was a total mistake. My intent was to say the financials had to make sense for Yahoo, that this was not Yahoo under pressure to do something. There were many investors who said: 'Just take $5 billion.' What am I going to do with $5 billion? I [already] have $4 billion in cash. I need a revenue stream.

WSJ: Are you seeing signs of an upturn?

Ms. Bartz: The signs out there are totally mixed. You feel one week there's an upturn, then you get consumer news and you back off a bit. Our advertisers are moving again to get in front of their consumers. A year ago they were frozen.

We absolutely see movement in the economy, but it just wouldn't be appropriate to say this is going to be a straight shot up to the right when you have what's happening in Europe and when you've got the uncertainty over jobs.

WSJ: What kinds of content do Yahoo users want to see more of?

Ms. Bartz: They want to see more local content – things within a five to 10 mile radius that people want to know what's going on, like coupons and restaurants. People love to know other people's opinions, the whole idea of polling, commenting and rating. That is part of how we operate now online.

WSJ: It sounds like you'd love to have a user-recommendation site like Yelp, a location-sharing app like Foursquare and a local-coupon site like Groupon. Would they fit into Yahoo?

Ms. Bartz: The concept of what they do, sure. They're local, they're rating, they're user voted-on. A lot of these things aren't necessarily high technology, it's the process they've set up and sometimes you want to buy companies like that because they already set a process up and have a name. And sometimes you say: "We can do it."

WSJ: Do companies like Groupon or Yelp already have brands established that create a high barrier to entry?

Ms. Bartz: To have a barrier to entry you have to have more of a Facebook kind of a brand. After the 2000 downturn, companies grabbed a lot of technology only to find out it didn't scale. Company ABC is really good, but once you bring it into this size operation, it breaks. Then you are asking: 'Am I buying good engineers who can reengineer it to our scale, or are we just buying the brand and working furiously behind the curtains ourselves to make it work?' When you are large you always have to consider if you can really bring it in and make it work

๑۩۞۩๑๑۩۞۩๑๑۩۞۩๑๑۩۞۩๑๑۩۞۩๑

Sphere: Related Content