Updated: Bartz Out At Yahoo; Fired Over The Phone

Push has finally come to shove at Yahoo (NSDQ: YHOO). Kara Swisher reports that Carol Bartz is out at Yahoo and that CFO Tim Morse is interim CEO. Bartz has been rumored to be out the door almost as long as she has been at Yahoo; the drumbeat only has gotten louder in recent months as investors and analysts waited in vain for a major turnaround. The depressed Q2 U.S. display advertising results combined with a warning that Q3 would be flat may have been the last straw.

Yahoo has yet to reply to multiple contacts stayed silent for an hour, leaving it up to Bartz. (Kara is one of the very few people I would go with this quickly on an unconfirmed report; she has been ahead of the game on nearly every major personnel move at Yahoo since Bartz.) Techcrunch has an e-mail from Bartz confirming the news in her customary direct fashion: “I am very sad to tell you that I’ve just been fired over the phone by Yahoo’s Chairman of the Board.” That would be Roy Bostock.

The Yahoo board gave Bartz a vote of confidence at the annual meeting in June but we’ve heard that before right before top Yahoo execs are deposed. Yahoo finally confirmed the ouster an hour after the story broke, announcing Morse as interim CEO and establishing a leadership council of top executives.

When Bartz won the CEO job in January 2009, the idea was that her lengthy experience at the top of Autodesk as CEO and then executive chairman would outweigh her lack of experience in media and the consumer internet. Her blunt way of speaking, often peppered with four-letter words, drew attention and won some fans. Too often, though, the words masked a lack of substance. I sat with a veteran media industry analyst at a UBS conference when Bartz was interviewed during a lunch that coincided with the ill-fated launch of a major Yahoo branding campaign. He told me he came prepared to see new potential for Yahoo; he left completely dismayed by her poor performance and inability to articulate a strategy for Yahoo. Bartz was supposed to do a similar Q&A at the 2011 Citi Technology Conference Wednesday.

As so often has been the case, Yahoo was caught completely flatfooted this afternoon. From the minute the decision was made, the Yahoo board should have been ready to handle premature publicity. Communication issues preceded Bartz and while some have improved, much of the song remains the same: Yahoo can’t tell it’s own story.

Firing a CEO over the phone left a bad taste, too. As Macquarie’s Ben Schachter put it: “That Carol Bartz is out is not shocking, but the unseemly manner of the ouster is indicative of Yahoo’s current state of affairs.”

The board, led by Bostock, is part of that state of affairs. There’s been some turnover — Eric Hippeau is gone, for instance, and Akamai’s David Kenney has joined — but this primarily is still the same board that had co-founder Jerry Yang step aside as CEO and chose Bartz as his replacement. The board backed Bartz as she signed away the search business to Microsoft (NSDQ: MSFT), through reorgs and an exodus of execs, and during a dispute with Alibaba that was finally settled this summer. (That stake in Alibaba is Yahoo’s most valuable asset.)

Now that board is starting a major strategic review and a CEO search.

But business doesn’t stop. Yahoo not only has to operate day to day wuthout further derailing its sales progress or other initiatives, it is in the midst of a biddging process on a major acquisition: Hulu. The online video portal owned by News Corp. (NSDQ: NWS) Disney (NYSE: DIS), Comcast (NSDQ: CMCSA) and Providence Equity Partners is collecting bids and Yahoo is part of the current group, also thought to include Amazon (NSDQ: AMZN), Dish and possibly Google (NSDQ: GOOG).

They could solve a lot by acquiring Hulu, which has an edge in streaming video advertising and a growing subscription service. It also has Jason Kilar, the Amazon alum who applied his product and operational expertise to what became Hulu. Could he do the same for Yahoo? They don’t need to acquire Hulu to get its CEO — it’s not even clear that he would stay in a sale — but the two together is an idea well worth exploring. I’d be surprised if they haven’t already.

The lack of clarity about Yahoo’s future, though, may give the partners pause about it as a buyer.

Initially, it looked like Bartz could finish the calendar year. Instead, last month Yahoo’s independent directors started their own review, according to the WSJ, and decided the assets weren’t performing as well as they could.

On top of all the concerns over the past year, that was enough to push for the move now instead rather than postpone the inevitable and lengthen the recovery time and transition even more.

Last fall we charted the slew of Yahoos who left the company since Bartz took on the CEO role in January 2009. Here it is, embedded below: