Wednesday, September 07, 2011

Carol Bartz Fired....Why Not Jeff Immelt Too?

One of the big business news items out this morning was Carol Bartz' firing in a phone conversation late yesterday. Pundits on both CNBC and Bloomberg were all over the story this morning, harping on the flat performance of Yahoo's stock during her 21/2 year tenure which began in early 2009.

Meanwhile, just yesterday the Wall Street Journal did a Marketplace section lead feature on GE's hapless CEO Jeff Immelt. More details on that in a later post.

For now, let's look at a chart I think I can safely guarantee you will see nowhere else this morning. It's the past five years of performance for the S&P500 Index, Yahoo and GE.

Look closely at the chart from early 2009 onward. I last wrote about Bartz and Yahoo here, in early July, when the rumors of her exit began to heat up in earnest. I noted there that, under Bartz, at least Yahoo's price had stabilized- stalled- in contrast to its decline prior to Jerry Yang begging her to become the firm's CEO. The chart illustrating that is in the linked post.

Exact timing to the day is impossible to do from this chart, but, generally, from early 2009, when Bartz assumed the helm at Yahoo, to now, both GE and Yahoo have had about the same relative stock price performance- up slightly, but much less than the S&P500, which rose more than 30%.

So doesn't that make you wonder why Bartz is getting axed, while Immelt gets a softball puff piece in the Journal, complete with friendly reviews from a fund manager?

For the full five years, Immelt's down nearly 60%! And so is Yahoo.

Regarding Bartz, I stand by my comments of my early July post,

"Personally, I think Yahoo's sluggish performance is less about Bartz and more about the wreck she inherited. A wreck with nearly nothing left on which to build the fabled "turnaround."

As I've contended in many posts, after Jerry Yang screwed up the exit strategy of selling the firm to Microsoft, there was little left to do. For shareholders, just selling and walking away was the best option.

Whether Bartz ought to be replaced or not is probably moot. Yahoo's fortunes are unlikely to improve under any other CEO. At this point, though, there may not be any buyers for the firm at prices that the board and shareholders will tolerate, so badly has the firm been mismanaged since when Terry Semel ran it."
Anytime a marquee CEO is bought by a desperate, failing firm, that CEO really has no downside. If s/he succeeds, everyone applauds yet another lustrous chapter in her/his turnaround and leadership career. If s/he fails, many judge the situation inherited as too far gone for even that well-regarded CEO to salvage.

Remember, just 21/2 years ago, Yahoo wanted Bartz so badly that they gave her a contract that runs through 2013.

Not surprisingly, as my many posts about GE under Immelt contend, I believe he should have been gone over five years ago, and GE broken up into its large business units. It's an aged, diversified conglomerate with absolutely no reason for being in the modern financial era.

So if Carol Bartz deserves to be fired for her last 2 1/2 years of performance at Yahoo, so, too, does GE CEO Jeff Immelt.

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