Yahoo Board Backs CEO Bartz Amid Questions From Testy Shareholders

The big question at Yahoo’s annual shareholder meetings over the last couple of years has been when the clock will run out on Carol Bartz. The Yahoo (NSDQ: YHOO) CEO survived her third shareholder’s meeting on Thursday with the support of the company’s board, despite Yahoo’s turnaround being stuck in neutral.

Yahoo has steadily lost its luster over the last decade as Google (NSDQ: GOOG) has cemented its dominance of the web search market. Since it spurned a $33-per-share takeover bid from Microsoft (NSDQ: MSFT) three years ago, Yahoo’s share price has languished below $20. Bartz was brought in two-and-a-half years ago to turn Yahoo around, and although the company remains one of the most popular sites on the internet, her efforts have been overshadowed by the meteoric rise of Facebook and Twitter. Despite the company’s huge traffic, Yahoo’s share of the display and search advertising markets continues to decline.

But the board is sticking with her. “We are confident that Yahoo is headed in the right direction,” Yahoo Chairman Roy Bostock said at the shareholders meeting, adding that Bartz has the board’s full support, for now. (It’s worth noting that Yahoo’s board backed former CEO Terry Semel at the company’s 2007 annual meetingone week before he was replaced by Jerry Yang.) Despite the vote of confidence in Bartz, shareholders reacted skeptically, driving the company’s stock price down nearly three percent in mid-day trading.

Many shareholders were also looking for insight into the fate of Yahoo’s 43 percent stake in Chinese online retail giant Alibaba, as well as the possibility that the company might bid for online video site Hulu. But Bartz had little to say about those issues. The Alibaba position has been considered one of Yahoo’s top assets, but there has been uncertainty about the stake since Alibaba spun off its payment division Alipay in May. Bartz said the company is continuing to negotiate with Alibaba and its other major shareholder, Softbank, but declined to comment on specific details of the talks.

Facing occasionally testy shareholder questioning, Bartz outlined the company’s content strategy, which revolves around what she referred to as “anchors and tent-poles” — high profile events like the Super Bowl, the royal wedding, and Osama Bin Laden’s death. “Yahoo is the number one website in the United States and has been for seven months in a row,” said Bartz. “You probably don’t realize that.” The royal wedding was the biggest one-day event in Yahoo’s history, she said, with 300 million visitors to the site and 26 million video streams.

“We’re making substantial progress in our plan to turn Yahoo around,” she said.

Despite Yahoo’s ability to rack up traffic around big news events, the company’s share of the $31 billion online ad market will fall to 11 percent by the end of this year, down from 16 percent in 2009, according to eMarketer statistics cited by the Associated Press. By contrast, Google’s share of the ad market is expected to reach 41 percent, up from 35 percent in 2009, while fast-growing Facebook will hit 7 percent, up from 2.4 percent.

In the web search market, the company all but declared defeat two years ago, when it struck a deal with Microsoft to handle the back-end of its search business. “We believed we couldn’t continue to invest in the back-end to stay competitive,” Bartz said. “Microsoft can do that, and that’s why we pay them.” That move failed to dent Google’s web search market-share, however, which remains above 60 percent.