Before the official Yahoo earnings conference call began after markets closed Tuesday, an company investor relations executive went through a laundry list of risk factors facing the company, including the possibility of a takeover or partnership, shareholder litigation, macro economic forces that could lead to unforeseen negative circumstances and so many others.
To which new CEO Carol Bartz said, as she took over the conference call with analyst: "I should've understood all those risks before I took this job!"
There was laughter and she went to work. "It's been 8 days since I took this job and I'm already feeling at home," she said, saying that she's met with employees and received "hundreds of emails." She's witnessed "wonderful energy," and almost seemed surprised by it, adding that as an "outsider reading the press last year," it was easy to see that Yahoowas "distracted," and mired in difficulty. But now that she's had a chance to walk the campus and meet with workers, she has discovered instead a real focus among the rank and file and a strong product pipeline. She conceded that there are still fundamental issues that need to be addressed, not the least of which is the company's owned and operated site revenue which continues to be soft. Fees revenue also declined 12 percent and that's a disappointment too.
However, she believes there is still "an incredible opportunity that exists here at Yahoo."
"This organization is extremely complex," she continued. "I'm excited and encouraged by what I've seen so far."
Bartz asked her own questions since she has heard so many people as them as well: "Did I come to Yahoo to sell the company? The answer is no. I'm here because I see a tremendous collection of assets."
"Second, am I planning to immediately sell the Search business. I did not arrive here with preconceived notions about anything. It's very easy from the outside to have an opinion about what Yahoo should or shouldn't do," she said, adding that
"Search is a very valuable part of our business." She's made no final decisions about that aspect of the company's business, and continues her fact-finding mission. She offered no real time-frame on when she might make a decision.
Youseff Squali from Jefferies, kicked off the question and answer period, asking what the key two or three elements are that Bartz needs to figure out to determine whether the company will remain independent. Bartz said she didn't come to Yahoo to sell the company, and as far as getting more out of the wonderful assets the company already has, it's about bringing clarity to the strategy, increasing the audience and their time online, making the site as friendly and as engaging as possible. "It's too early to say more than that," she said.
Ben Schachter from UBS Securities asked about board member meetings with Microsoft and AOL: "We don't have any comments about press reports that come from nowhere, and that will be our consistent theme throughout this conversation," said Bartz. So there you go!
Another question came up about Bartz's biggest concerns to date about Yahoo. She said she's most concerned about the complexity of the organization and it's "hard for people to get speedy answers." "I'm telling you there are some really smart people here and they're really motivated to work for a top notch company." She wants to streamline the organization and she's pretty good at that kind of thing, she said. She didn't offer specifics about how she plans to do that.
- Get After-Hour Quotes for Yahoo
On the conference call, Yahoo's CFO Blake Jorgensen conceded that a lack of visibility prevents it from offering a full year of guidance. But to help analysts with their models, the company suggested that it expects fees revenue to decline by $80 million; fees revenue from VOIP and music subscription business to decline $65 million; currency exchange rates should have a negative $200 million impact on overall revenue too. Yahoo also anticipates 40-43 percent tax rate for the year. And all of that before even addressing the macro-economic climate that affects the company's revenue.
All in all, a good first effort by Bartz, even if it was short on specifics. I don't think any analyst was expecting a big-time strategic vision here, but there was likely the anticipation of something more structural than the "I'm working on it" theme. The one reaction-metric that matters: Yahoo's share price, which held its post-earnings stock pop through the course of the conference call, and even managed to accelerate slightly. If that's an indication, then Bartz and team did just fine.