Yahoo replaces CFO as CEO draws up turnaround plan
Tuesday, September 25, 2012
SAN JOSE, Calif. (AP) — Yahoo CEO Marissa Mayer is casting aside a cost-cutting specialist and bringing in software industry veteran Ken Goldman to be chief financial officer as the Internet company's management orchestrates a potentially expensive turnaround attempt.
The departure of CFO Tim Morse, announced Tuesday, isn't a shock. After joining a company, new CEOs often reshuffle senior executives while trying to assemble a management team that's better suited for a shift in direction.
But it usually takes six to nine months before an incoming CEO hires a new chief financial officer, said BGC Financial analyst Colin Gillis.
Mayer is replacing Morse just two months after Yahoo lured her away from Google Inc., suggesting that there may have been some friction between the two, Gillis said.
Morse, 43, will leave the company next month to make way for Goldman, who take over as CFO on Oct. 22. Yahoo didn't immediately disclose whether Morse will receive a severance package or reveal how much it is paying Goldman to leave his current job as CFO of Fortinet Inc., a maker of computer security software.
Since joining Yahoo in June 2009, Morse has spent much of his time pruning costs — an endeavor that enabled the company to boost its profits even as its revenue has been drooping.
Although she hasn't yet shared her vision publicly, Mayer is believed to be focusing on steps designed to delight Yahoo's audience of 700 million worldwide users but not necessarily investors. As part of that process, Yahoo could pour more money into some products and remove some of the ads that clutter its Web pages to the exasperation of some users. She is sharing more of her vision with Yahoo employees in a series of meetings beginning this week.
"I think we can kiss (Yahoo's) increasing (profit) margins goodbye for a while," Gillis said.
Yahoo has declined to discuss Mayer's plans. The company says she will talk more extensively next month when the company reports its third-quarter results. A specific date for the earnings release hasn't been set.
The company's stock added 8 cents to $15.76 in Tuesday's extended trading after the CFO change was announced. Yahoo shares have been hovering between $15 and $16 through most of Mayer's brief tenure, reflecting Wall Street's uncertainty about what direction she intends to push the company.
Goldman, 63, has been in management for more than 30 years and has been a CFO with at least six other companies, including Fortinet, which is located about five miles from Yahoo's Sunnyvale, Calif., headquarters. He is perhaps best known as the CFO of Siebel Systems, where he worked for six years until the business software maker was sold to rival Oracle Corp. for $6.1 billion.
"Yahoo is an iconic brand with an incredibly strong business model and balance sheet," Goldman said in a statement. "I believe there is a lot of runway ahead for this business, and I look forward to working with Marissa and the rest of the executive team as we define Yahoo's future."
Goldman will have more cash to work with because of a complicated deal that Morse played a key role in negotiating. During the past two years, he helped broker a deal that culminated in Yahoo selling half of its 40 percent stake in one of China's rising Internet stars, Alibaba Group. The $7.6 billion sale, including a revised technology licensing agreement, was completed last week.
After taxes, Yahoo anticipates a $4.3 billion windfall. The company plans to spend $3 billion of that buying back its stock, leaving another $1.3 billion for acquisitions or other investments.
Morse also filled a leadership gap at Yahoo after the abrupt firing of Carol Bartz as its CEO a year ago. Bartz had hired Morse to weed out expenses.
After Bartz's ouster, Morse served four months as Yahoo's interim CEO until the company hired Scott Thompson in January. Thompson lasted just four months before he stepped down amid an uproar about inaccurate information on his official biography.
Besides bringing in a new CFO, Mayer last month hired former Amazon.com Inc. executive Kathy Savitt as Yahoo's chief marketing officer.
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