While everyone seemed abuzz about Yahoo's announcement that former Autodesk CEO Carol Bartz had signed on to head the floundering search firm, All Things Digital's Kara Swisher had an even juicier tidbit to offer: Now that Yahoo's firmed up its chief executive decision, Microsoft sources say it's ready to go ahead with a Yahoo search partnership deal. Could Google be facing some real ad competition soon?
Bartz promises to bring Yahoo some much needed stability, a stark contrast with Yahoo's previous CEO Jerry Yang, who decided to step down in November. As she colorfully expained to reporters during a conference call:
"More than anything, let's give this company some friggin' breathing room. It's been too crazy, everybody on the outside deciding what Yahoo should do, shouldn't do, what's best for them. That's gonna stop."
Such strength is probably just what Microsoft was waiting to see. Swisher says Microsoft has already readied its search deal proposal to be floated to the Yahoo board. And she quotes one Microsoft source as saying the deal is already "ticked and tied," and could be signed as soon as Yahoo's Jan. 27 earnings report. While she didn't yet have the details, she figures the deal will be similar to what Microsoft's Kevin Johnson offered in June, that is Microsoft investing $8 billion in Yahoo at $35 a share, plus Microsoft purchasing Yahoo’s search assets for $1 billion plus the operations and R&D expense, all while returning data back to Yahoo for use in its advertising business.
But while Microsoft waited for Yahoo to name its new CEO before proceeding, Bartz's appointment doesn't mean the deal is a lock. According to Seeking Alpha's Joel West, Bartz isn't about to let Yahoo fail (or simply give away its search to Microsoft for a pile of money):
The truth is, [Bartz] gets tech, she gets the tech culture, she understands how to manage an innovative software-based company — something Yahoo once was and hopes to be again. Her discussion of “fail-fast-forward” shows that she knows how to both encourage and manage innovation and risk-taking in a large established tech company.
So, the question is whether she'll use that knowledge to ink a deal with Microsoft, or find some other innovative way to make Yahoo a stronger player in the overall marketplace. While most pundits assume a Yahoo-Microsoft deal is a must-have, especially for Yahoo, Bartz's call for "breathing room" doesn't suggest the deal is as "ticked and tied" as some suggest. Both Yahoo and Microsoft have lost marketshare to Google, especially in recent months. Bartz will need to factor that, as well as Yahoo's long-term viability, into any decision--and she doesn't seem one to cave easily to Microsoft pressure.
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