Ousted Yahoo CEO Carol Bartz says Microsoft search deal will pay off, eventually

Carol Bartz and Steve Ballmer in 2009

Carol Bartz’s penchant for colorful language is making headlines following her dismissal as Yahoo’s CEO earlier this week.

“These people fucked me over,” she tells Fortune in an exclusive interview today, not mincing words about the Sunnyvale, Calif., company’s board.

But beneath her attention-grabbing verbiage is an interesting assertion by Bartz about what could be the defining moment of her tenure as the company’s CEO — the decision to partner with Microsoft in the Internet search and advertising business.

Here’s how Fortune’s Patricia Sellers explains Bartz’s outlook on the deal …

As Bartz sees it, Yahoo’s search partnership with Microsoft —a deal she negotiated two years ago to offload costs—has Yahoo paying Microsoft 12% of its search revenue and limits current growth but will help the company long-term. She attributes the directors’ impatience to the criticism they faced when they turned down a lucrative deal to sell Yahoo to Microsoft in 2007, before she arrived. “The board was so spooked by being cast as the worst board in the country,” Bartz says. “Now they’re trying to show that they’re not the doofuses that they are.”

Microsoft handles the underlying search technology and advertising infrastructure for Yahoo under the deal. Bartz in April said  “technical limitations” in Microsoft’s adCenter were resulting in fewer clicks than expected on ads next to search results, and impacting Yahoo’s revenue.

  • Guest

    Yeah, Yahoo’s board is perhaps to only high profile one in technology that is even worse than MS’s. But could they really keep her after she let some of Yahoo’s most valuable Asian assets get sold out from underneath her? And the MS deal so far has shown very little promise for either Yahoo or MS.

    Yahoo’s board could have handled the firing with more class, but at least they had the courage that MS’s lacks and removed a CEO who wasn’t succeeding in repositioning the company for future success. The market seems to agree.

    • Bob

      Jerry Yang was most directly in charge of the Alipay situation. So he should go too.

    • Maverick

      How is MS’s CEO failing when quarter after quarter MS is making more and more money and setting profit records?  He’s failing in perception, but not in results.

    • Maverick

      How is MS’s CEO failing when quarter after quarter MS is making more and more money and setting profit records?  He’s failing in perception, but not in results.

      • Goose

        By losing a decade head start in mobile and tablets to Apple and now Google. By arrogantly dismissing the chances of first iPhone and then iPad and taking three and two years respectively to finally respond. By losing $8b so far in search with almost nothing to show for it. By having overall growth drop to <10% while Apple, now a larger and more profitable company, is growing at 70%. By having an employee approval rating that is below 30%. By losing half the value of MS over the last decade. By investing 8x Apple in R&D and yet getting beaten by them in music, mobile, and now tablets. Basically by making mistake after mistake to the point where there is now widespread concern about MS's future and Frank Shaw has to spend most of his time comically denying that the company is being disrupted and tweeting about how they're #notdeadyet.

  • Guest

    Yeah, Yahoo’s board is perhaps to only high profile one in technology that is even worse than MS’s. But could they really keep her after she let some of Yahoo’s most valuable Asian assets get sold out from underneath her? And the MS deal so far has shown very little promise for either Yahoo or MS.

    Yahoo’s board could have handled the firing with more class, but at least they had the courage that MS’s lacks and removed a CEO who wasn’t succeeding in repositioning the company for future success. The market seems to agree.