Bartz: Yahoo is fine, thank you, without Microsoft

Yahoo will do perfectly fine even if it doesn’t strike any type of deal with Microsoft, Yahoo CEO Carol Bartz said Wednesday.

There is excessive interest in whether the two companies will partner, and although some benefits could come from a tie-up, Yahoo will succeed regardless, she said.

“Yahoo doesn’t have to do anything with Microsoft about anything,” she said, speaking at the Bank of America and Merrill Lynch 2009 U.S. Technology Conference.

“Yahoo has a bright, bright future, probably cleaner and simpler without even thinking of any Microsoft connections,” said Bartz, who answered questions from a financial analyst and from people in the audience.

“We’d be better off if we had never heard the word Microsoft,” Bartz added. Speculation about mergers or other deals started after Microsoft’s unsolicited acquisition offer early in 2008.

Bartz answered several questions about Yahoo and Microsoft, and acknowledged that a search partnership would help Yahoo better compete against Google by providing more scale and reducing some operating costs.

She also said that it would be a good idea for Yahoo to buy Microsoft’s Internet unit, or parts of it, but that such a deal would never pass antitrust review in the U.S., particularly if it involved Yahoo acquiring Microsoft’s webmail and instant messaging services.

Bartz also indicated that Microsoft’s strategy on the Internet is very different from Yahoo’s. Microsoft has “Google envy” and feels pressured to put up a stronger fight in the Internet market in order to curb Google’s “money machine,” which allows Google to make advances against Microsoft in office and communication software, she said. Yahoo, on the other hand, is entirely focused on the Internet.

Google’s dominance in search is due more to its strong brand in the space, which has created a habit among users, and to the scale it has amassed, than to technical superiority, she said. Yahoo’s search result relevance is better than Google's, she said.

About 98 percent of queries on Yahoo’s search engine are made by people who are already on a Yahoo site, so the key to growing the company’s search usage is to attract more people to Yahoo Web properties, she said. Yahoo isn’t a search company, but rather a broader provider of useful online services and content, she added.

After five months as CEO, Bartz is exhilarated and excited about the future of the company, which she said had been held back by a management structure that made it difficult to act quickly. “Anything you can do in three steps, Yahoo does it in 22,” she said.

The argument that Yahoo missed the boat on social networking and video is flawed because both areas are still in their infancy, and Yahoo approaches them differently by attempting to use those technologies in the context of its Web sites.

Thus, Yahoo’s interest is to enrich existing services with video and social features rather than go head-to-head against Facebook or Twitter in social networking or YouTube and Hulu in video sharing and broadcasting.

While Yahoo does a good job assisting chief marketing officers with the creative part of their advertising campaigns, it is horrible at making it easy for marketers to purchase ads, she said. “We have to take a lot of that friction out” of buying online ads, she said.

Another key area for Yahoo is mobile, and the emphasis now is on attracting users. “Monetization is the last thing on my mind. I want the audience. You get the audience and you get the money,” she said.

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