Yahoo CEO and would-be savior Carol Bartz took to the stage on Wednesday to convince analysts that the ailing Internet giant is on the road to recovery. Although she described this year's financial performance as "pathetic," Bartz did her best to paint a bright picture for the company's future. One promising area, she said, is mining the wealth of data Yahoo collects on site visitors' interests.
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With its stock in a three-year funk, Yahoo (Nasdaq: YHOO) set out Wednesday to persuade investors that the Internet company's struggles are nearly over.
"We have fallen and we really want to get back up," Yahoo Chief Executive Carol Bartz said as she kicked off an all-day meeting with financial analysts. "We really want to get back on our tippy toes."
Bartz vowed to make the company more profitable, and said she hoped Wednesday's session would win back some of the respect that the company lost as two previous CEOs were unable to deliver on their turnaround promises.
As a first step, Yahoo pledged to boost its operating profit margin to a range of 15 percent to 20 percent by 2012, up from just 6 percent this year -- a performance Bartz derided as "pathetic."
$19 Billion Gone
Although it didn't set a specific timetable for hitting a target, Yahoo said it believes it can increase its annual revenue by nearly US$1.5 billion. The company, based in Sunnyvale, Calif., thinks it can rake in the extra money doing a better job of capitalizing on a marketing shift to the Internet in the U.S. and expanding its market share internationally.
Yahoo expects it revenue this year to be about $6.4 billion, a decline of roughly 11 percent from 2008. Management also plans to increase profits by weeding out expenses, simplifying its computer coding and eliminating wasteful spending. Yahoo already has trimmed its work force by 13 percent, or 2,000 jobs, during the past year.
Wednesday's meeting marked the first time that Yahoo provided analysts with an extended overview of its strategy in three-and-a-half years. Most public companies hold the presentations, known as "analyst days," every year or two. The Associated Press monitored Yahoo's meeting through a webcast.
Yahoo has been losing ground to Google (Nasdaq: GOOG) and other hot Web sites, such as Facebook. The problems have hurt Yahoo's earnings and revenue, contributing to a 47 percent drop in its stock price that has wiped out about $19 billion in shareholder wealth since the last analyst day.
Yahoo shares fell 65 cents, or 3.9 percent, to close Wednesday at $16.04.
Most of Wednesday's meeting was devoted to a procession of management executives elaborating on improvements to the company's Web site.
Smarter Than the Average Bear?
Among other things, the executives detailed how a makeover of Yahoo's home page is getting people to spend more time on the Web site and providing more opportunities to show the advertising that generates most of the company's revenue.
As visitors spend more time on the Web site, Yahoo is collecting more information about its users' interests that management expects to help deliver more ads that get their attention.
"We have more insight than the average bear," Bartz said. "The opportunity to mine that data ... is enormous for us."
Yahoo also is expecting big things from a proposed Internet search partnership with rival Microsoft (Nasdaq: MSFT).
Under the proposed alliance, Microsoft will process users' Internet search requests on Yahoo's Web site and provide much of the advertising tied to those inquiries. The deal , which still requires regulatory approval, is supposed to lower Yahoo's expenses, freeing the company to focus on luring more traffic to its Web site.
A definitive agreement between Yahoo and Microsoft was supposed to be signed by now, but the companies agreed Wednesday to an indefinite extension to negotiate a few more details. Bartz assured analysts that there were no major snags threatening the partnership.
Bartz forged the Microsoft partnership in July, ending years of intermittent discussions between the companies that became a sore point with investors last year. That's when Bartz's predecessor, Yahoo cofounder Jerry Yang, turned down a chance to sell the company in its entirety to Microsoft for $47.5 billion, or $33 per share.
Yang's hopes to forge an Internet search partnership with Google then fell apart under regulatory scrutiny, leading to Bartz's hiring nine months ago.
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