Wednesday, December 8, 2010

A Lion in Winter

Carol Bartz gave a freewheeling interview at the 92nd Street Y last night. I like her straight forward style and think it was what Yahoo needed to untangle itself from too many weak strategic initiatives which left the once proud company listless. The jury's still out on whether, after two years of clean-up, she can ignite a growth story. I suspect, the answer to this will be her legacy at big purple. Following are selected snippets from the conversation:

Vision- "To be the supplier of the Internet of 1" She went on to explain that, with over 240mm web sites it's impossible for a person or a company to effectively gather information. She views Yahoo's primary mission to be the curator of information and add further value by personalizing it in a format that maximizes the relevance for the user and the value for the advertiser.

Timing- She was a bit defensive on the period of time it has taken for the company to show real positive revenue growth (1.6% trailing 12 month rate) and noted that it took Steve Jobs 7 years to reignite the growth engine at Apple click here to see APPL's chart to see that, outside the '00 bubble, the company was basically flat from '87-'04. Be that as it may, she's optimistic that the initiatives in place should get them back on the growth track shortly.

Competition- She views Facebook as their #1 competitor. I was surprised by this as I don't view FB as a curator of information from other web sites

M&A- She confirmed they did try to buy Facebook 4 years ago. The bid was $1B and the ask was $1.5B. She was not asked, and did not comment on the rumors that they bid on Groupon last year. AOL was mentioned a few times and her dismissive response was "hahahhaha". When looking at transactions, they first look to buy users, content, then advertising technology and finally engineers.

For comparison, here's the trailing revenue and profits for the top 5 public internet companies:

Company Trailing 12 month revenue Profit margin %

Yahoo $6.5B 16

EBAY 9.0 29

AMZN 30.7 4

GOOG 27.6 29

AOL 2.6 NA

Here's a link to an edited version of the interview

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