September 06, 2011, 10:59 PM — As she approached her third anniversary as Yahoo's CEO, Carol Bartz couldn't overcome a recent string of missteps that apparently eroded the board's confidence in her and eclipsed her achievements as leader of the embattled Internet pioneer.
Bartz took over from co-founder Jerry Yang in January 2009 with guns blazing, straight talk that sometimes included profanity, and a history of executive success at Digital, Sun and Autodesk, where she served as CEO from 1992 to 2006.
Bartz got carte blanche and the benefit of the doubt from the board in her first two years at the helm, when she oversaw a significant corporate realignment intended to make the company more agile, a big technology upgrade to improve its advertising and publishing systems, and a streamlining of the company's products and services.
However, this year the directors seemed to become more skeptical about her abilities to deliver the much-awaited turnaround for Yahoo, which not only has continued on a financial funk, but also stumbled in various ways.
Bartz started off on the wrong foot in January this year when during the company's fourth-quarter earnings call, she disclosed that the search engine partnership with Microsoft wasn't yielding the expected revenue.
That wide-ranging, 10-year search partnership, which Bartz brokered with Steve Ballmer in mid-2009, continues to disappoint revenue-wise, and critics question whether it will yield the promised financial benefits for Yahoo and the improved competitive position for it and Microsoft against Google.
Then in May, Bartz was criticized for an embarrassing spat between Yahoo and Alibaba Group, the company which has managed Yahoo's brand and services in China since 2005.
Yahoo, which holds a 43 percent stake in the company worth $2.32 billion as of March 31, 2011, said it was caught by surprise when it found out that Alibaba Group had spun off its Alipay online payment unit to a Chinese company controlled by Alibaba CEO Jack Ma.
But Alibaba Group officials contradicted Yahoo, saying Bartz and other officials were fully aware of Alibaba Group's plan to divest itself of Alipay in order to comply with new Chinese regulations.
The companies later agreed to stop the public bickering and engage in closed negotiations over what Yahoo and other investors considered fair compensation for the loss of value related to Alipay's divestiture.
An agreement was eventually reached in late July, but the episode made many investors, financial analysts and industry observers cringe, and it reflected badly on Bartz.
Days before the Alibaba Group controversy got resolved, Bartz delivered another bad-news whammy during the company's second-quarter earnings call: Yahoo's U.S. display ad business, consistently a strong point for the company, had stumbled badly.