Tickers in this Article: YHOO, GOOG, MSFT, P, AOL, AAPL, IBM
When Yahoo!'s (Nasdaq:YHOO) board of directors hired Carol Bartz as CEO in January 2009, did they charge her with the job of justifying their decision to reject the $45 billion bid from Microsoft (Nasdaq:MSFT) a year earlier (the one that arguably also led to Jerry Yang stepping down)? Or was the decision simply based on the need for a new voice to lead a turnaround? Whatever the implicit, explicit-but-behind-closed-doors, or explicit reasons for bringing Bartz on board, Yahoo!'s board has tired of the experiment and fired Bartz late Tuesday.

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Who's Next?
According to a message from Bartz, the chairman of the board (Roy Bostock) fired her by phone - something that may not necessarily rankle the wired generation, but a move that will likely lead to a few mutters and shakes of the head in the older generation(s). In place of Bartz, the board has named CFO Tim Morse as interim CEO and will start the executive search process.

What Now?
Oh by the way, the board is now apparently open to the idea of selling the company now - years after the point where Yahoo! ceased to be an interesting player. That, in a nutshell, is also likely a big part of the reason that the board felt Bartz had to go.

It's hard to underestimate the role Yahoo! had in the early days of the internet, and it deserves credit for surviving the tech boom and bust - something that other early would-be titans like Lycos or Netscape couldn't do. By the same token, Google (Nasdaq:GOOG) has not only long since lapped Yahoo!, it's collected the trophy, flown home and grabbed the remote. Likewise, companies like Facebook, Groupon, Pandora (NYSE:P), Spotify and Twitter have all come into being and captured niches in the internet, advertising and mobile content space that could have belonged at some point to Yahoo!. (For related reading on the tech boom and bust, see Industries Prone To Bubbles And Why.)

What is Yahoo! now? Revenue is sliding and though the company has some solid assets like Yahoo! Finance and Yahoo! Sports, the reality is that hardly anyone spends even a fraction of the time wondering what Yahoo! will do next compared to the likes of Google, Microsoft or Apple (Nasdaq:AAPL). The company has lost mindshare and while not yet irrelevant, clearly needs to figure out what it wants to be lest it it stay on the same slow path to irrelevance as AOL (NYSE:AOL).

What Matters and What Doesn't
It is interesting to see more than a few articles focusing on Bartz's apparently brash and aggressive style. Glassdoor, for instance, shows how Bartz's approval rating among employees has steadily fallen - from a high of 90% around her hire to a low of 24% recently. Moreover, there are plenty of catty comments out there - one Tweet of "ding dong the witch is dead" and comments addressing a "lack of execution," "senseless speeches" and so on.

Is any of this relevant? Not really. Success often makes for happy employees and failures bring out the long knives. It's hard to imagine how a Yahoo! employee would feel good about working for a company whose stock price has gone nowhere and no longer has a clear competitive niche. After all, despite all of the weepy paeans to Steve Jobs in the past weeks, for much of his tenure as a CEO he was regarded as an unreasonably demanding (if not outright unpleasant) boss.

What frankly matters in the executive suite is not the ability to emote nor the ability to pat heads and hand out lollipops. What matters is the ability to see how the markets and customers are changing and to morph the business in such a way that it is standing by with new products or services almost before customers realize they want them. After all, just consider the fact that Android (a mobile device operating system) is now one of the most talked about parts of Google, a search engine company. What Yahoo! needed before, and needs now, is a leader who can identify the markets and products that Yahoo! must be in to be a relevant and exciting company in 2015 and not just a straggler.

The Bottom Line
Whether she realized it or not, Bartz was taking a major risk when she joined Yahoo! and it didn't work out. More often than not, the leaders of the last wave of innovation struggle to stay relevant through subsequent generations - it happened to names like Xerox (NYSE:XRX), Epson, Atari, Digital, nearly happened to IBM (NYSE:IBM), and may be happening to Dell (Nasdaq:DELL) and Cisco (Nasdaq:CSCO).

On the plus side, Yahoo! is a profitable company with a lot of cash and several sticky assets. This is definitely a company that can be rejuvenated and rebuilt. The question, though, is whether or not the board can lure in the right talent and allow for an aggressive re-think of the company's future. (Tune out the accounting noise and see whether a company is generating the stuff it needs to sustain itself. For more, see The Essentials Of Corporate Cash Flow.)

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