Is the "Gut" Bone Connected to the Knee-Jerk Bone?
In an article in The Wall Street Journal yesterday, it was reported that newly installed Yahoo CEO Carol Bartz told an all-hands meeting “that she plans to spend a lot of time investigating whether to sell Yahoo’s search business but that her ‘gut’ was not to do that.”
Yahoo (YHOO) stock, no surprise, took a hit at the remark, which made it seem like Bartz–who has a tech background–was siding with the anti-search-sale geek squad burrowed deep in the heart of Yahoo and in its board too.
Wall Street has long been hoping that a new administration at Yahoo was the last thing that needed to happen before Yahoo strikes a lucrative deal for its search business with Microsoft (MSFT) and finally put some fire under its long-simmering stock.
And while Bartz tossed a smidgen of water on that flame, it still might be a good idea to pay closer attention, as she is your typical savvy exec who obviously relishes, and spends a lot of time perfecting, the delicate Kabuki dance of negotiations.
I think Bartz clearly knew that what she said would get out, sending an indirect I-didn’t-just-fall-off-a-turnip-truck signal to Microsoft (MSFT) that she might deal, but that she would not be pressured into it.
To my mind, as much as Bartz fancies herself a “straight shooter,” this shot was more curved than one of Angelina Jolie’s bullets in “Wanted.”
I would expect then, once Bartz decides to play, she’ll gather info internally quickly and there will be high-level reach-out-and-touch friendly face-to-face meetings–they have already had one phone conversation–to heal old wounds with Microsoft CEO Steve Ballmer, who has said many times that he is ready to deal and, in fact, is.
Yahoo does indeed have factions very opposed to a search deal of any size. I have heard from many sources that their main worry is that a substantial search deal with Microsoft will cut off any hope of the software giant making another bid for all of Yahoo.
I doubt Bartz, who has been trotting out the tough-talking, been-there-done-that persona to the Yahoo troops, truly believes that Microsoft has any genuine interest in another acquisition bid.
So Bartz did what she thought best as an opening gambit, showing that she will neither bite nor reject too early, in order to get the best deal she can for Yahoo.
“She’s shouldn’t be in a hurry to make a mistake,” said one former Yahoo exec, who thought Bartz’s gut remark was a way to slow down the process.
Of course, there is a limit to this clever kind of delay, as Bartz will find out soon enough. Yahoo employees and investors are bone tired of waiting for the company to either commit wholly to winning in search and say so firmly or give up and take a Microsoft deal.
But because Bartz just got to Yahoo and is not so weary, it makes sense she would try to pace herself.
In any case, once she moves, it’ll be even more interesting what her other body parts–her heart, her head, her esophagus?–will say when they start to chime in too about what should be Yahoo’s fate.