Update: Carol Bartz fired as Yahoo CEO

The now-ex-CEO tells staff via an iPad email message that she was fired via a phone call today

Carol Bartz has been replaced as the CEO of Yahoo by the company's chief financial officer, Tim Morse, Yahoo has confirmed and as first reported in a report today on the Wall Street Journal's All Things D blog.

After the All Things D report surfaced, TechCrunch.com published what it said was an email message from Bartz to the Yahoo staff, sent from her iPad, saying, "I am very sad to tell you that I have just been fired over the phone by Yahoo's chairman of the board. It has been my pleasure to work with all of you and I wish you only the best going forward."

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All Things D had also reported that the board of directors informed Bartz of "the need to make a change" after 30 months of no improvement in the Web portal company's valuation under Bartz's leadership.

The struggling search company has created an "executive leadership council" to help Morse run the company and to conduct a "comprehensive strategic review" aimed at getting Yahoo back on a growth track. The council includes Yahoo co-founders Jerry Yang and David Filo.

Bartz's tenure as CEO began in January 2009 after Yang announced plans to step down. She took over following an extensive courtship in which Microsoft tried to acquire Yahoo, but which eventually turned into a partnership between the companies.

That partnership hasn't paid off as well as Yahoo hoped. Revenue at the company continues to fall, and its display advertising business, where it historically was a leader, has begun to suffer too.

"It's not a surprise" to see Bartz go, said Greg Sterling, an analyst at Sterling Market Intelligence.

At the company's recent annual meeting, a shareholder called Bartz a "lame-duck CEO" and called for her resignation. Yahoo Chairman Roy Bostock defended her at the time.

Bartz was widely supported in the beginning. "She was kind of a breath of fresh air for a while," said Sterling. She had a strong track record as CEO of Autodesk and before that as an executive at Sun Microsystems, and had a "no-nonsense" style, Sterling said. She was known for her colorful language and dropped the "F-bomb" at least once during a company earnings call.

Bartz made a number of organizational changes and for a while had the bad economy to blame for Yahoo's lackluster performance, Sterling said. But ultimately she failed to retain some top talent who have left the company since she took over. "There were just a ton of great people that came out of there that abandoned ship," he said.

Yahoo needs a dynamic leader who will get people excited and bring a strong product vision, Sterling said. Morse would clearly be an interim leader while the company looks to hire a permanent replacement, he said.

Taking on a new leader while the company continues to struggle will be a challenge. "The problem with a new CEO is if you have more of a revolving door," Sterling said. Often, new leaders want to bring in their trusted advisers and remove some existing executives.

In a statement, Bostock thanked Bartz for "her service to Yahoo! during a critical time of transition in the company's history, and against a very challenging macro-economic backdrop."

At the time of this report, Yahoo's shares were up more than 6 percent in after-hours trading, at $13.72.

Nancy Gohring covers mobile phones and cloud computing for The IDG News Service. Follow Nancy on Twitter at @idgnancy. Nancy's email address is Nancy_Gohring@idg.com.

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