• by Mark Walsh , January 13, 2009

Two months after Jerry Yang announced his resignation, Yahoo Tuesday named former Autodesk chief executive Carol Bartz to succeed him as CEO. In Bartz, 60, the beleaguered Web giant has turned to a respected high-tech industry veteran to reverse its sagging fortunes.

Yahoo said that President Sue Decker, who was also in the running for the job, would leave the company. In a statement, Yahoo Chairman Roy Bostock said Bartz "is the exact combination of seasoned technology executive and savvy leader that the Board was looking for, and we are thrilled to have attracted such a world-class talent to Yahoo." He added that she was the only candidate offered the job.

Bartz, who was CEO of San Rafael, Calif.-based software maker Autodesk from 1992 to 2006, faces a daunting set of challenges in her new role. Among the immediate issues that confront her are the possible renewal of talks with Microsoft over the sale of its search business and whether to pursue a deal with Time Warner for all or part of its AOL unit.

She will also have to consider further cutbacks at the company that shed 1,000 of 14,000 workers in December. Rebuilding company morale--and Yahoo's depressed stock price--after its failed merger with Microsoft last year will be longer-term tasks.

"There is no denying that Yahoo has faced enormous challenges over the last year, but I believe there is now an extraordinary opportunity to create value for our shareholders and new possibilities for our customers, partners and employees. We will seize that opportunity," said Bartz in a statement.

Yahoo is counting on her as an experienced Silicon Valley hand to steady the company after a tumultuous 18-month period under Yang capped by the rejection of Microsoft's $4.7 billion acquisition bid.

During her 14 years at Autodesk, where she also served as executive chairman, revenues at the company--which makes design software--grew from $300 million to $1.5 billion, while the stock price increased nearly 10-fold. Today it boasts about a $4 billion market cap.

She has also been an executive at major technology companies including Sun Microsystems and Digital Equipment Corp., and serves on the boards of Cisco Systems and Intel Corp.

Initial reactions to her appointment appeared to characterize Bartz as a solid, if not bold, choice. Citi Internet analyst Mark Mahaney called Bartz "a good pick" in a research note issued after The Wall Street Journal first reported Tuesday that she was to be named Yahoo's new CEO.

"She would appear to clearly bring to Yahoo organizational chops, a new perspective, and substantial technology industry experience, having also served on the boards of Intel and Cisco," he wrote, reiterating Citi's "hold" rating on Yahoo. Its shares closed Tuesday down .98% at $12.10, but were up nearly 3% to $12.45 in after-hours trading following the announcement of Bartz's hiring.

Mahaney and other industry observers, however, noted that she lacked media industry experience. The analyst suggested this gap on her resume could be remedied by hiring or retaining staff with that background.

Kevin Lee, CEO of search engine marketing firm Didit, agreed. "She's clearly a smart executive and can surround herself with brilliant talent who understands digital advertising media and can advise her as to strategy and execution," he said.

He called Yahoo's selection of someone from the software industry "telling." "She can speak Microsoft's language, and I'm sure Yahoo is sending a message to Microsoft by picking her," he said. Microsoft CEO Steve Ballmer said in recent weeks that a search deal should go forward following management changes at both companies.

Microsoft in December hired former Yahoo executive Qi Lu to head its Internet business.

Bartz may also seek to push ahead on an AOL deal to help bolster its core display ad business, being hard-hit by the economic downturn. Talks between Yahoo and Time Warner over AOL have been ongoing periodically for months, but with little result.

The new CEO also comes on board as Yahoo rolls out its APT platform for automating the buying and selling of display ads. More about the progress on that project and Yahoo's search business overall will be known when the company announces fourth-quarter and year-end earnings on Jan. 27.

Sue Decker leaves after almost nine years with Yahoo in various management roles, including chief financial officer. In commentary released after Yang announced his resignation in mid-November, research firm IDC dismissed Decker as a potential successor, calling her "as much a part of the Ancien Régime as is Jerry Yang."

Whether Bartz is the "Lou Gerstner" that IDC called for in the same report to make "some painful decisions" to turn Yahoo around remains to be seen.