After CEO Carol Bartz was fired over the phone on Tuesday, a new Yahoo CEO will temporarily take over until a permanent replacement is appointed. Yahoo Chief Financial Officer Tim Morse has now been promoted to interim CEO. He will be performing both CFO and CEO functions with the help of the company's Executive Leadership Council. He'll also have support and guidance from Yahoo co-founders David Filo and Jerry Yang.
Investor Reaction to the Interim Yahoo CEO
Investors expressed approval of the decision, and Yahoo shares surged 6 percent in afterhours trading. However, business analysts aren't so optimistic about the success prospects for the new Yahoo CEO. While firing Carol Bartz has received unanimous approval, analysts believe that Tim Morse should have been canned as well. In a statement to investment clients regarding Yahoo's Bartz and Morse, Global Equities Research analyst Trip Chowdhry said, "They both have damaged Yahoo's business, and repairing it will be extremely difficult."
While serving as Yahoo's CFO, Morse had a record for making decisions based on cost-cutting measures, not asset development or innovation. In addition, the new Yahoo CEO has exhibited an inability to move forward at the pace required in the Web 2.0 environment. In his tenure as Yahoo CFO, Morse worked with Bartz on features that never resulted in significant revenue growth. Further, their timeline for development of new products and features is often years, while competitors like Google and Facebook work on a timeframe that is a fraction of that.
The Search for a Yahoo CEO
In order for Yahoo to successfully move forward, Morse will have to be replaced with a talented and visionary CEO as soon as possible. A major concern is that a CFO, by definition, is an officer of a company from a financial perspective, not an overall organizational one. Analysts are skeptical of Yahoo's ability to attract top talent, so Morse may be in the CEO position long enough to do even more damage to Yahoo's future.