According to sources close to the situation, Yahoo has hired Heidrick & Struggles for its CEO search.

It will be a dicey job, since the effort is on a separate track than the Silicon Valley Internet giant’s wide-ranging strategic review, which is looking at a range of options including the sale of the company.

That’s why many see the move as window-dressing for Yahoo’s board, rather than any real interest in hiring a new leader.

Sources said that will make the search a difficult one for Yahoo, since any CEO candidate would be coming into a very volatile situation. In addition, Yahoo has been struggling — Struggles, struggling, get it? — to recharge its advertising and search business and also its product innovation cycle.

That’s the reason — among several others — that the board of Yahoo suddenly fired its former CEO Carol Bartz last month.

Heidrick has worked for Yahoo previously, in the now ill-conceived placement of Bartz by partner John Thompson. A different partner will be handling this assignment, sources said.

The pool of possible CEOs to lead Yahoo is not a large one, but could includes execs such as Juniper Networks CEO Kevin Johnson, Chegg CEO Dan Rosensweig, Skype CEO Tony Bates, John Pleasants of Disney’s Playdom, Hulu CEO Jason Kilar, Facebook COO Sheryl Sandberg and any number of top Google execs, as well as Yahoo board member and Akamai President David Kenny.

(I am, of course, waiting by the phone for the call.)

A Yahoo spokeswoman declined to comment.

According to sources at the company, Yahoo’s Carol Bartz is no longer CEO of Yahoo. CFO Tim Morse has been named interim CEO.

The situation around what is clearly an ouster is uncertain, but Bartz has had a very rocky tenure in her 32 months at the company.

[UPDATE: Yahoo confirmed the departure of Bartz in a press release outlining a reorganization.]

Bartz also sent a stunning email to staff, saying she had been ousted:

To all,

I am very sad to tell you that I’ve just been fired over the phone by Yahoo’s Chairman of the Board. It has been my pleasure to work with all of you and I wish you only the best going forward.

Carol

Several sources said the board, specifically Chairman Roy Bostock and Co-founder, as well as director Jerry Yang, acted today, informing Bartz by phone of the need to make a change.

What the next steps will be are unclear, but Yahoo needs desperately to explore a range of strategic changes to bring it back to its former glory.

But Wall Street liked the move, with Yahoo stock up more than six percent already in after-hours trading.

Sources said Morse held a call with Yahoo’s senior staff this afternoon, telling them Bartz was out and that a search for a permanent CEO will be commencing.

Why Yahoo’s board did not name a new leader immediately is curious and might indicate a larger deal around Yahoo is in the offing.

As I wrote earlier today, when the Internet giant announced on January 13, 2009, that it had hired longtime Silicon Valley tech veteran — who was well-regarded for her tenure at running Autodesk — to replace outgoing CEO and co-founder Yang and turn around the company, there was much hope.

At the time, she presented a take-no-prisoners image and was touted as someone with a reputation as a professional manager who could clean up the place.

Not so, as it has turned out.

While Bartz has streamlined certain areas and made some strong management hires, her performance has been decidedly bumpy and mostly downhill.

The share price has settled in at about $12.50 (just about where it was when Bartz took over), Yahoo’s recent financial results have been weak, its key advertising business is struggling, its attrition rate among engineers and others is startlingly high and its product innovation cycle seems stopped up.

Add to that: Weak relationships with key Asian partners, a pricey but failed marketing effort and a proclivity for embarrassing verbal gaffes by Bartz.

Still, given that Yahoo’s Internet traffic, top media sites and brand remain huge, the going-sideways situation has again caused some investors — including powerful private equity firms and other monied investors — to pull out their spreadsheets about a variety of scenarios related to Yahoo.

The players who have sniffed around of late are powerful, sources said, including Silver Lake Partners, Andreessen Horowitz, former News Corp. exec Peter Chernin and Providence Equity Partners, among others. Also in the Wall Street rumor mill recently are large companies: AT&T, News Corp. and Verizon.

All the schemes are different — ranging from taking it private to making a large investment to splitting it into parts — although they all seem to require cooperation with Yahoo to get done.

And while there is no serious effort afoot as yet, there have been increasing signs of late that Yahoo’s board is ready to listen to any serious offers, said multiple sources, especially as the company has continued to drift under the leadership of Bartz.

While board chairman Bostock has publicly backed Bartz — after all, he was her biggest champion at the time of her hiring — multiple sources said he had started to become more involved at looking at the management issues at the company and its challenges.

Yang — still a key figure at Yahoo — has also become more active, said sources, and tensions between him and Bartz have increased over the last few months.

The increasing pressure on the directors of the company from its major shareholders to act has gained in recent months, said sources.

Thus, Bartz is gone and the next chapter in Yahoo’s corporate drama begins.

[Photo credit: Asa Mathat for All Things Digital]

Related posts

• As Yahoo Continues to Wobble, Investors (And Board) Eye Options
• Exclusive: Carol Bartz Out at Yahoo; CFO Tim Morse Named Interim CEO
• Carol Bartz’s Last F%*& You — Now Aimed at Yahoo Board
• Yahoo’s Statement on Bartz Ouster
• Wall Street Likes Bartz’s Firing — Yahoo Stock Spikes on News
• My Picks for Yahoo’s Next CEO — Maybe Snoop Dogg, Ya Digg?

Twitter co-founder Biz Stone took time off from his myriad of witty talk show appearances to slap around a just-published Fortune cover story that was titled–get it?–“Trouble@ Twitter.”

Wrote Stone, in part, on his personal blog in a post titled “The Trouble Bubble”:

We founded Twitter, Inc. in March of 2007 and while we have long said it’s about the users, not the service, we have nevertheless enjoyed favorable media coverage. What took so long for somebody to write the article that says we are falling apart? The normal press cycle is to put a company on a pedestal and then knock it down. It’s much more interesting that way. Twitter has had so many ups and downs you’d think we would have had more negative press. To me, it’s like watching the movie Rocky–he’s up, he’s down, he’s out, he wins!

He correctly points out Fortune’s reliable proclivity–see Google, Facebook–to write a wildly positive piece about the latest tech phenom, followed by a smackdown, followed by a they’re-back! tome.

Now, it is the San Francisco microblogging company’s turn.

(In Fortune’s defense, you try selling a magazine these days without a hookish cover line! Hence, the hit-you-over-the-head wounded bird motif here.)

But vegan-y, nice dude that he is, Stone ends on a positive note:

“For a long time, we refused to hire a communications group and now that we have one, I’m having fun teasing them about this Fortune article but the truth is, we’re long overdue to be knocked down by the press.”

While it must be pointed out that Rocky suffered from brain damage in the last installment of the famed movie franchise, BoomTown awards a Stone-cold win for Mr. Biz-boa!

Here’s the full post:

The Trouble Bubble

We founded Twitter, Inc. in March of 2007 and while we have long said it’s about the users, not the service, we have nevertheless enjoyed favorable media coverage. What took so long for somebody to write the article that says we are falling apart? The normal press cycle is to put a company on a pedestal and then knock it down. It’s much more interesting that way. Twitter has had so many ups and downs you’d think we would have had more negative press. To me, it’s like watching the movie Rocky–he’s up, he’s down, he’s out, he wins!

Fortune magazine finally stepped up to knock us down with a cover article, “Trouble@Twitter.” Here are some examples of how this works. After mostly positive coverage of Facebook, Fortune finally published an article in April of 2009 titled, “Is Facebook Losing Its Glow?” However, later that year they published, “What Backlash? Facebook Is Growing Like Mad.” Google received similar treatment. In July 2010 Fortune published, “Google, The Search Party Is Over.” Later that year, they published, “Google Continues To Gain Search Marketshare.”

We’ve had lots of positive press from Fortune in the past. In July of 2010 they published an article titled, “Twitter’s Business Model: A Visionary Experiment.” The article ended with, “Facebook might want to take notes.” It may seem odd, but from my perspective, this means we are being taken very seriously. Twitter is an important company and it’s under scrutiny from journalists–this is exactly how it’s supposed to work. Now it’s our job to prove the reporters wrong so they can write an article later about how we have made dramatic progress.

The Twitter team is an incredibly dedicated group of people who truly believe they are doing the most meaningful work of their lives. It’s also a very small group of people when compared to the other companies Fortune is investigating. We still have under 500 employees–many of them working weekends and nights to fulfill a potential that is palpable. For a long time, we refused to hire a communications group and now that we have one, I’m having fun teasing them about this Fortune article but the truth is, we’re long overdue to be knocked down by the press.

Let’s get this out of the way right now–WakeMate co-founder Arun Gupta said the start-up is finally shipping all pre-orders of the long-awaited sleep tracking gadget.

Gupta said, “Our goal is to fill all pre-orders by Christmas.”

And I can even verify that the unit exists, since I have been using one for a week now.

So why all the skepticism?

Because WakeMate–which began as an idea for a smart alarm clock back in 2006 and graduated out of the Y Combinator incubator in summer of 2009–has had more than a few delays in delivering product.

To be fair, the tiny company might have bit off a fair amount to chew. WakeMate chose a solution to the sleep-tracking problem that required it to build original hardware, a main Web application, as well as apps for Apple’s iPhone, Google’s Android and Research in Motion’s BlackBerry.

Thus, Gupta describes the first version of its product as “really, a public beta.”

And, WakeMate is indeed a little rough around the edges.

For example, the unit itself–with its semi-exposed electronics and shrink-tube wrapper–looks a little more like something hacked together on top of one of the mini DIY Arduino boards than it does a finished consumer electronics device.

But if you have any experience programming microcontrollers, you might appreciate the sort of sophistication that goes into coordinating this sleepy symphony of data gathering.

(Pardon us for a minute, while I get a little über-geeky and explain how the WakeMate wristband works. If this doesn’t concern you, feel free to fast-forward a few paragraphs to get to Gupta’s predictions for WakeMate’s future.)

When you flick the small switch on the WakeMate wristband, just prior to going to sleep, the device connects via Bluetooth to your iOS, Android or BlackBerry device.

You then open the WakeMate app and enter a 20-minute window during which you’d like to be woken.

The app talks to the wristband and transmits that time information. Then, both app and device enter a sort of low-power state. At this stage, the WakeMate becomes little more than a data logger.

There is a fairly standard, solid-state, three-axis accelerometer on board, much like the one that allows you to “shake to shuffle” your iPhone.

WakeMate then spits out three fields of data–X,Y and Z axis readings–40 times per second, which are stored in its flash memory all night.

That means an eight-hour sleep cycle will produce about 3.5 million unique data points, not including metadata.

The onboard clock–for the computer, not for human time-telling–waits until your pre-selected 20-minute window and then figures out, based on frequency and severity of wrist movement, when you are closest to being awake on your own.

When that moment comes, it wakes the Bluetooth connection, connects to the phone, sounds the alarm and starts uploading the data it collected all night directly to the phone and immediately sends the information to WakeMate’s servers.

And, not to worry, if the WakeMate dies mid-sleep, the phone knows to sound the alarm anyway.

It is quite a concert that needs to be played flawlessly for connectivity and battery life to remain intact.

Impressive data tricks aside, the world in which WakeMate was conceived looked a little different from the one into which it has been born, and that means a different set of competitive realities.

When WakeMate left Y Combinator, the world of iOS device-connected movement sensors was limited to the Nike Fit, which links running performance via a shoe-attached device.

It was also a world without Fitbit, another popular activity and health tracker.

And, unlike now, there were no sleep apps claiming to do what WakeMate does.

But now, even with all the new rivals, Gupta believes WakeMate still has the edge.

He explained: “In the early days of sleep-tracking studies, doctors decided to monitor non-dominant wrist movement as part of the data collected to determine sleep state. That continues today, so there is a ton of research that has been collected over the years on correlating wrist movement with sleep cycle.”

He added that WakeMate has built an algorithm that fits the data collected by its wristband to these medically relevant sleep-cycle models and spits out graphs mapping your sleep states, your waking moments and even times when you were in deepest sleep.

“All the competing tools out there aren’t at all based on any kind of accepted research–no one is studying pillow movement or waistband movement or anything,” Gupta said. “But we know how you are sleeping when you move your wrist.”

The major questions facing WakeMate as a company revolve around what one might expect from a start-up with such a complex beta product.

Gupta said it will focus on innovating and revising its wristband, as well as doing more interesting things with the data it will collect.

“On the macro level, we’re really doing the biggest sleep study that has ever been done,” he said. “We’ll be able to tell you how people are sleeping in San Francisco versus New York, based on seasons and all kinds of things.”

Gupta added that while he doesn’t know what the next step is, WakeMate is prototyping ideas where it could correlate sleep data with other metrics about health, occupation and stress to provide a more complete tool set.

But as more companies work on the problem of digitizing the analog data of human life, the harder questions to answer are really in front of the consumer.

Gupta said he doesn’t know what a world would look like if a health insurance company could access your sleep data, or when information about your apparent insomnia is grabbed by some hacker.

What WakeMate hopes for, he said, is a world where more people have access to the kind of medical data collection that has previously only been collectable by trained technicians in controlled settings.

But more data is better, as far as WakeMate is concerned–it is hoping that its vision puts its products at the center of an all-day biometric data collection future.

Here’s how Yahoo’s top brass and board–with the help of its newly re-engaged crisis-management PR firm, Abernathy MacGregor–are already trying to spin the latest executive turmoil to hit the company:

Trashing those on the way out, to take focus off those remaining who have been just as responsible for driving the Internet icon and claiming that this is all part of yet another well-planned reorganization at Yahoo (YHOO).

Don’t believe most of it for a second. Some of it is corporate politics as usual, some of it rejiggering of events, some just not true at all.

After BoomTown’s scoop earlier today that Yahoo’s U.S. head Hilary Schneider, as well as Audience head David Ko and VP of Media Jimmy Pitaro, would be departing the company–all of which Yahoo is still planning to announce after the markets close on Friday–here comes this gem in a follow-up story in The Wall Street Journal:

“[Yahoo CEO Carol] Bartz, who joined Yahoo in January 2009, is in the midst of a turnaround effort. People familiar with the matter said she is removing the company’s old guard to assemble a new team.”

Let’s parse this ridonkulous spin-addled blame game, shall we?

Bartz is, in fact, the very person who picked all those execs for prime responsibility in her last reorg.

If they were so incompetent, why not dump them much quicker? After all, it’s not like the problems have not been mounting for months and months, with more and more talent taking off.

In addition, the exec exodus at Yahoo over the last year has been unrelenting and broad, encompassing way too many employees for her to act as if it were all planned and okay.

As to the “midst of a turnaround effort” canard that Bartz keeps insisting on, even comparing herself to Apple (AAPL) CEO Steve Job’s epic journey to return that legendary company to health?

Um, we are deep in the second year of the Bartz regime, and there appears to be no iPod-like save in sight, and it’s a little long in the tooth to keep using the turnaround excuse for all that has not yet happened under her command.

Which is to say, stock with a pulse and real growth across all metrics, as Facebook and Google (GOOG), to name a few, are showing.

In addition, it was Bartz herself who handed over a lot of the responsibility for the revival of Yahoo to Schneider.

Which meant Schneider had to be thrown under the wheels of the bus in the Journal by dragging out a very old–and tangential to the much larger flat revenue crisis at Yahoo–newspaper deal as pretty wet cannon fodder:

“Ms. Schneider is leaving because officials haven’t been satisfied with her performance, according to people familiar with the matter. Ms. Schneider was responsible for a 2006 deal with industry group Newspaper Consortium, in which Yahoo sold ads for newspaper websites and print editions. The effort continues but has not met Yahoo’s expectations, according to a person close to the company.”

Memo to readers: “People familiar with the matter,” I am guessing, would be current Yahoo execs.

The fact of the matter is that there have been both critics and admirers of Schneider at Yahoo, which comes as no surprise for one of its top execs. Some consider her smart and canny, while others complain of indecisiveness and slowness to act.

And, she has definitely had some very big whiffs, including the newspaper consortium, but most especially not finding an ad sales chief to replace Joanne Bradford, who left in March, about which I gave her a hard time when a very squishy structure was announced.

And, right now, sources tell me, Yahoo’s upcoming quarterly report could be an even tougher one.

And that falls to Schneider, of course, who has been in charge of its many partnerships, as well as advertising sales across the key Americas region.

Perhaps good reason for an ouster, except I have been tracking Schneider’s status for many months now, since hearing from many sources–not her, ever, in case you wanted to know–that she had told Bartz she wanted out.

Maybe that is what began to sour the boss on Schneider. But to now suddenly call her performance poor seems unusual, especially when you can just as easily point to Yahoo’s disastrous and pricey marketing campaigns–it is definitely not You!–helmed by CMO Elisa Steele, which has failed to move the needle on key user metrics.

But she has a tight relationship with Bartz, so she’s all right, jack? I am dizzy from all the spinning.

In other words, execs make mistakes and there is a lot of blame to go around and–as the old saying goes–the buck really does stop with Bartz.

But, guess what? Perhaps it should be noted that Bartz has also misstepped badly of late by making a series of wild remarks that have seriously angered many partners and other companies in Silicon Valley.

And I have heard from countless and very significant investors, all of whom are deeply concerned about her tone and recent public comments.

Just ask Yahoo Japan’s Masayoshi Son. Or Alibaba’s Jack Ma in China. Or the fine folks over at Apple in Cupertino, Calif.

And, I can also report that several execs at Yahoo’s new search technology partner, Microsoft, are also increasingly alarmed. Said one to me yesterday: “It is becoming a little unsettling.”

I can say for certain that Ko, who will doubtlessly be the next to get dinged, left on his own motor, telling Bartz himself recently.

He was quickly followed by Pitaro, who, as I reported earlier this week, is headed to another big company. No matter what the spin, his departure is a big loss, as he is well-liked inside and outside the company.

Then Schneider rounded out the latest trio of execs to go.

Thus, sources said, Yahoo is about to go on the offense, which is the expected thing to do, ready to announce a plan to move most of the product organization under Chief Product Officer Blake Irving.

The former Microsoft (MSFT) online exec is as sharp as a tack, in my experience, and clearly an even sharper corporate player, recently bringing in a series of his old cohorts from the software giant to take over big jobs at Yahoo.

He’s obviously now won some version of a corporate power play, and is now in favor with Bartz. But that means he’s being handed the entire thing.

Apparently, Irving has told numerous people that he plans to “rip it all down” and streamline the whole organization.

More rearranging at the company that has moved around the corporate living room umpteenth times over the past several years? Except it is still essentially the same room and same house.

Okay, Irving should probably have his choice of where the sofa goes, but as one exec wisely told me tonight: “Yahoo needs to build great products, not have another reorg….It needs a win.”

Indeed, just as board member Eric Hippeau apparently said at a recent meeting to deal with the latest executive kerfuffle.

Yahoo Chairman Roy Bostock–who has presided over so many stumbles over the years that I have lost count–said to the room: “We need crisis management.”

Countered Hippeau, a longtime Internet exec who is now CEO of the Huffington Post: “What we need is revenue.”

Indeed. And innovation. And a vision. And, most of all, spin-free leadership.

As it turned out, Microsoft (MSFT) blew past even the sunniest Wall Street expectations in its fourth-quarter earnings.

Spurred by a robust PC upgrade cycle, net income rose to $4.5 billion, or 51 cents a share, from $3 billion, and revenue to $16.04 billion from $13.1 billion. Analysts had been expecting earnings of 46 cents a share on $15.2 billion in revenue.

(Even losses from the Online Services Division were lower than the previous quarter, dropping from $731 million to $696 million–although this quarter’s losses were more than the same quarter a year ago, which were $585 million.)

BoomTown was on a plane jetting to Aspen for the Fortune Brainstorm Tech conference, so I missed liveblogging the management call this afternoon (sorry, Frank!). Here are the software giant’s slides of the financial results to peruse at your leisure:

Microsoft Q4-FY10 Slides

“iPad yields should improve dramatically throughout the year even if the launch starts out capacity constrained,” Reitzes wrote in a research note to clients today. “These developments support upside to consensus forecasts for the iPad, should demand materialize like we think it can. We estimate Apple will sell almost 5 million iPads for CY10; including 1.2 million in the June quarter–which could prove conservative.”

As for the iPhone, the analyst says, “Also, we have increased confidence that Apple will make a big splash this summer with a new iPhone form factor. We believe that the new model will launch with considerable fanfare and expect unit expectations to rise in turn.”

“Big splash,” “considerable fanfare”: That’s certainly been the case with iPhone launches to date. No reason to expect things will be any different this time around.

As for iPad sales, there’s really no telling yet, though “people familiar with the matter” have told The Wall Street Journal that Apple has sold hundreds of thousands of units via pre-order and could end up selling more iPads in the first three months than it sold iPhones in the three months after that device’s debut.

Said Intel exec Boyd Davis: “We’ve already shipped hundreds of thousands of these (processors).” And for good reason. Built using the company’s 32-nanometer processor technology, these Xeon 5600 series chips promise to deliver greater performance and energy efficiency than their predecessors. With luck, they’ll help drive new equipment spending in enterprise, which would obviously be good for both the server and chip markets.

“We are preparing for a [second-half] letdown in PCs,” Moskowitz wrote in a research note to clients. “While our revised unit growth estimates are edging up, our draconian revenue outlook remains unchanged. We continue to model sub-seasonal sequential trends for the second half of the year.” Demand, he adds, will continue to be slow, and the coming launch of Microsoft’s (MSFT) Windows 7 OS will be no panacea. “So far in the June quarter, our conversations with industry contacts suggest that PC end demand remains soft, and there are increasing concerns of another inventory correction across the food chain if suppliers continue to target normal seasonality in the second half of the year….We have not seen a major PC upgrade cycle related to an operating system launch since 1995, and we do not expect anything different with Windows 7.”

Back in March Gartner predicted that the PC industry would see its sharpest unit decline in history in 2009. Sadly, Moskowitz’s note would seem to bear that out.

The technology industry was supposed to cut 180,000 jobs in 2008; instead, it cut 186,955 jobs –up 74.2 percent from the 107,295 job cuts recorded in 2007. That’s the dismal word from recruitment outfit Challenger, Gray & Christmas, which helpfully notes that this is the largest industry workforce reduction since 2003, when tech suffered 228,325 layoffs.

Still a chance to break that record, though. Said Challenger, “Cuts could reach even higher in 2009, as there is no evidence yet that the economy has hit the bottom of this downward portion of the cycle. We almost certainly will not see a repeat of the 2008 first quarter, in which tech cuts totaled just 17,345.”