Analysts: New Yahoo CEO won't seek Microsoft deal

Carol Bartz, the newly-appointed CEO at Yahoo, won't be rushing into a deal with Microsoft, say analysts.


Carol Bartz, the newly-appointed CEO at Yahoo, won't be rushing into a deal with Microsoft, say analysts.

The former Autodesk chairman has a reputation as a tough and strong-willed executive, and would not have taken the job if it meant selling Yahoo's substantial search assets to Microsoft straightaway, said Karsten Weide, an analyst with research firm IDC.

"Judging from what I have heard about her, she would not have agreed to take on this job without telling the board, 'I'm the new CEO, I need to at least take a look at this. Let me make a decision about if this is a good thing or not,'" he said.

Greg Sterling, principal analyst with Sterling Market Intelligence, agreed that Bartz will not give up Yahoo's search assets - or the entire company, for that matter - very easily. "It's not a given she'll sell the business," he said, noting comments Bartz made point to her intention to "settle in for the longer term".

"She has talked like someone who is pretty passionate about the opportunity" to pull Yahoo out of its slump, Sterling said.

In Weide's opinion, outsourcing Yahoo's online search business to Microsoft would be a "strategic mistake". He thinks Yahoo remains a fundamentally sound company despite the opinion of those who believe doing a deal with Microsoft is the only way for it to compete successfully with Google.

"If you look at the numbers and the assets they have, they are a very strong company," Weide said. "Obviously they are very troubled, but it's nothing that couldn't be fixed."

Weide cited Yahoo's sustained profitability, experience in online media, broad audience reach and position as the market leader in online display advertising as reasons the company could possibly return to some of its former glory, even without Microsoft.

"There is potential that needs to be unlocked again at Yahoo, and I think Carol Bartz is a good person to have a good shot at it," Weide said.

Not everyone shares his optimism over Yahoo's prospects, especially as Google's lead in search advertising has only widened since Microsoft made its first unsolicited bid for Yahoo on February 1, 2008. Others still think a deal between them would be the best thing for both companies.

"From a search perspective, Microsoft needs Yahoo and Yahoo needs Microsoft if they are to create a credible alternative to Google," said Gartner vice president Neil MacDonald. "Neither one has shown they are capable of doing this themselves and the gap is only increasing. An infusion of cash from Microsoft could enable the new CEO to reinvigorate the Yahoo brand and properties."

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