Yahoo’s Bartz sees growth abroad – memo

February 9, 2009

Since Carol Bartz took over as Yahoo CEO last month, analysts and investors have busily speculated about her still undefined strategy to mend the Internet company.

Bartz, the former chief executive of electronic design software firm Autodesk, has offered few clues about her thinking,

In a memo to Yahoo employees last Friday, Bartz tipped her hand about one area she is bullish about: emerging markets.

“While I was still at Autodesk, I traveled extensively through these emerging markets and am a strong, strong believer in the opportunities that are out there,” Bartz wrote.

“Sure, there might be an economic slowdown,” she continued. “but that’s where the largest percentage of internet growth is going to be and we are going to play!”

Bartz recently met with Keith Nilsson, the head of Yahoo’s emerging markets group, in keeping with her efforts to meet with various managers and to learn about the company’s various operations.

Yahoo has had a research and development group in India for several years and the company has a strong presence throughout Asia. But Yahoo has plenty of room to grow overseas. In the fourth quarter, roughly 26 percent of its total revenue came from international operations, compared to the 50 percent at Google.

Yahoo does not break out financial results in emerging markets, providing only a general figure for “international sales,” which includes developed regions like Western Europe as well. In 2008, Yahoo’s international sales declined 10 percent from 2007.

“There’s an opportunity there for them in that in some of those markets, the competitive dynamic may not be as settled as it is here in US or in Europe,” said Friedman, Billings, Ramsey & Co analyst Heath Terry, who has an underperform rating on Yahoo and makes a market in Yahoo shares.

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