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Carol Bartz sacked as online firm struggles to match the might of Silicon Valley giants Google and Apple It was once the world’s leading search engine, its founders held talks about a merger with Rupert Murdoch’s News Corporation – and it even managed to fend off a $44bn takeover bid by Microsoft. But Yahoo has put itself up for sale, after firing its chief executive of 18 months Carol Bartz by phone. A fierce manager with a proclivity for swearing, Bartz was brought in to revive Yahoo’s fortunes after the company rejected the Microsoft bid, but she was unable to match the pace of innovation of the new Silicon Valley giants – Google, Facebook and a resurgent Apple. Her dismissal prompted what Yahoo said was a “comprehensive strategic review” to “position the company for future growth”. An insider speaking to the Wall Street Journal put it more bluntly, however, saying the internet business is “open to selling itself to the right bidder” – signalling the end to a 17 year history that parallels the emergence of the internet. In an email sent from her iPad Bartz told staff that she had been “fired over the phone” by the company’s chairman Roy Bostock . Her short reign leaves Silicon Valley without a prominent female CEO – although Forbes had already concluded that Cheryl Sandberg, the chief operating officer of Facebook, was already the most powerful woman in the technology industry in its list of the world’s most powerful women. The company has hired a team of headhunters to find candidates to take over the job, having temporarily installed Bartz’s deputy, the chief financial officer, Tim Morse, in the top role. But the mood inside and outside the company suggests Yahoo now faces the most serious challenge to its existence in its 17-year history. The problem for Yahoo is that it is being eaten alive by two upstarts, Google and Facebook, who are absorbing the advertising revenue it used to rely on. Yahoo’s second-quarter results were its worst since 2005 and Henry Blodget, the former Wall Street analyst turned pundit, suggested on his Business Insider website that the firing of Bartz probably indicates that the current quarter is going no better – and possibly worse as companies chop their advertising budgets as the economic weather clouds over. When appointed, Bartz set about slashing costs and staff – a move that made her instantly unpopular among the long-time “Yahoos” – but she was unable to revive the company’s revenues or profits. Since she joined, revenues have fallen more than 25%, and although profits have almost doubled, they are still below the peak seen between 2004 and 2006. Those are telling dates: Facebook had only just begun, and Google only went public in mid-2004. Since then, everything has worsened for the company as those two rivals take more of the advertising revenues it needs. Yet, despite all the problems, Yahoo still reaches an audience most websites can only dream of. It is the fourth most visited site on the web, with an estimated 590m monthly visitors, according to Doubleclick, behind only Google, Facebook, YouTube – and it remains second in search but well behind Google. In the US, Yahoo’s strongest territory, its share is 16% according to Comscore, compared to Google’s 65%. Net profits were $1.2bn – nearly double those of 2009 – but revenues of $6.3bn were marginally lower than they had been the year before. Bartz, a high-profile former chief executive of Silicon Valley software company Autodesk, had a tough reputation . She had few fans inside the company as she slashed staffing: the jobs and career site Glassdoor found that her recent approval rating among current and former Yahoo staff was only 33%, down from around 54% previously. By contrast when Jerry Yang, her predecessor, left 43% of the staff thought he was doing a good job. The average for chiefs on the site is 62%. Of course being chief executive is not a popularity contest, and Bartz, though, had little choice but to make unpopular decisions. Ironically, only two months ago Bostock said that the board was “very supportive” of her. Having dismissed her, he insisted that “the board sees enormous growth opportunities on which Yahoo can capitalise” – although the company has made similar claims before. When founder Yang was chief executive, he led the resistance to Microsoft’s blockbuster all cash bid, made in 2008. Yang rejected the hostile takeover offer because Yahoo had devised a set of internal forecasts suggesting its business would grow, beyond what Microsoft was offering. Then came the financial crash, and Steve Ballmer, chief executive of Microsoft, walked away from the deal. Bartz came back to him to tie up a search deal in which Microsoft is paying handsomely to power Yahoo’s search with its Bing search engine; but the deal is losing money for Microsoft, and bringing Yahoo no noticeable benefit. Microsoft’s bid valued Yahoo at $31 a share. Though the stock rose by 7% initially, in response to Bartz’s ousting, at $13.48 yesterday lunchtime it remained well below the spurned offer. Though the stock jumped at the news of Bartz’s departure, rising by 7% and adding $1bn to its value, Meanwhile, despite the share improvement, the mood both inside and outside the company was not improved. Analysts were unimpressed by the temporary replacement of Bartz with Morse, whom she recruited from computer maker Altera when she joined. “We think this is the right move, but sadly a year too late – Yahoo’s business has already been damaged,” Global Equities Research analyst Trip Chowdhry wrote in a note to clients. “Both Carol and Tim should have been fired together as they both have damaged Yahoo’s business and repairing it will be extremely difficult,” the analyst added. As Rupert Murdoch found when MySpace was overhauled by Facebook, once an internet giant starts losing momentum – or just simply ceases to be fashionable – it is very hard to reverse the path of decline. Unorthodox firings Fired by text When The Accident Group ceased trading in May 2003, many of its 2,500 staff a text message reading “Sorry to inform you that you will not be paid today. Don’t bother ringing the office.” Fired by email In 2006, Radioshack emailed 400 unlucky employees to tell them to leave. “The workforce reduction notification is currently in progress,” the message said. “Unfortunately your position is one that has been eliminated.” Resigned by tweet As the chief executive of IT firm Sun Microsystems, Jonathan Schwartz turned to Twitter to announce his departure – in a haiku. Fired by fax Andrew Marr was also fired by fax – and then unsacked by phone – during his time as editor of the Independent , after refusing to make job cuts. Fired by Facebook Last year teenager Chelsea Taylor logged onto Facebook to learn she had lost her job in a local cafe. Graeme Wearden Yahoo Yahoo takeover Internet Apple Google Mergers, acquisitions and funding United States Charles Arthur Dan Sabbagh guardian.co.uk