Yahoo fires CEO Carol Bartz over the phone

Online media company Yahoo has fired chief executive officer Carol Bartz, who was brought on board two years ago to turn around the company's troubled fortunes, and named Chief Financial Officer Tim Morse as interim chief executive.

Under a 'leadership reorganisation' move, the California-based company on Tuesday announced that its board of directors has appointed Morse as interim CEO with immediate effect, replacing Bartz, "who has been removed by the board from her role" as CEO.

Morse would continue to shoulder the responsibilities of his current role as Yahoo chief financial officer.

In an e-mail message to employees titled 'Goodbye', Bartz, 62, said she is "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," she wrote.

Click NEXT to check out why Bartz was fired. . .

Yahoo said it is "commencing a search for a permanent chief executive officer" and will work with an executive search firm to help identify candidates for the position "as expeditiously as possible".

"The board sees enormous growth opportunities on which Yahoo can capitalise and our primary objective is to leverage the company's leadership and current business assets and platforms to execute against these opportunities.

"We have talented teams and tremendous resources behind them and intend to return the company to a path of robust growth and industry-leading innovation," Yahoo board chairman Roy Bostock said in a statement.

"On behalf of the entire board, I want to thank Carol for her service to Yahoo during a critical time of transition in the company's history and against a very challenging macro-economic backdrop," Bostock said.

Bostock added that Yahoo is committed to evaluating possibilities and opportunities that will put it on a growth trajectory and deliver value to shareholders.

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The board also named key senior Yahoo executives to a newly formed 'Executive Leadership Council', which will support Morse in managing the company's day-to-day operations until a permanent chief executive is appointed.

The council will also undertake a "comprehensive strategic review" to position the company for future growth.

In addition to Morse, the council will consist of Yahoo executive vice president, general counsel and secretary Michael Callahan, executive vice president and chief product officer Blake Irving, executive vice president for the Americas Ross Levinsohn, senior vice president and MD Rich Riley and senior vice president APAC Region Rose Tsou.

Yahoo co-founders David Filo and Jerry Yang will also provide counsel to Morse and the executive leadership team.

Morse said he looked forward to working with the council and partnering with the board to "invest in the organisation and continue to drive its ongoing growth plans".

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Bartz, who joined Yahoo in January 2009, was tasked with revitalising the company, which had been suffering from stagnant growth and a decline in advertising revenue.

While Yahoo offers a wide portfolio of services like web search, news, finance and sports, its financial woes increased as newer social networking sites like Facebook and Twitter lured users as well as advertisers.

Yahoo has also been facing a mass exodus of its key executives in the last one year, including senior vice-President David Ko, vice president of Media Jimmy Pitrao, head of revenue for North America Joanne Bradford and Yahoo vice president of social platforms Neil Sample.

Why Carol Bartz was ousted

Analysing Bartz's ouster from Yahoo, Gartner's research vice president Allen Weinersaid said in his blog: Some 75 days after giving CEO Carol Bartz a vote of confidence, Yahoo's board has announced a leadership reorganisation under which Timothy Morse has been named interim chief executive officer, replacing Carol Bartz, who has been removed by the board.

The board has also announced a newly formed executive leadership council tasked with supporting Morse in managing the company's day-to-day operations until a permanent chief executive is appointed.

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Bartz's dismissal is not a major shock to Yahoo watchers as her departure has been speculated for more than a year, but the timing of the action comes as a surprise.

Yahoo has a major client event in mid-September and a change in leadership as the company enters a generally strong fourth quarter is curious.

While not easily confirmed, reports add to the mystery around Bartz's dismissal by saying it took place over the phone. Bartz had another 15 months left on her contract.

Neither the micro nor macro view of Yahoo's performance since Bartz took over in January 2009 paint a pretty picture.

The big picture shows that the Microsoft-Yahoo search alliance has not gone to either party's satisfaction and that Yahoo has lost a number of key executives and was caught so short-staffed is pointed to being undermanned as a reason for a disappointing Q2.

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Yahoo still calls itself a media-technology company but has a leader at the helm that had neither media nor web technology chops.

At the micro level, Yahoo many of the company's headline projects such as Connected TV and Livestand seem to be moving at a snail's pace and its social media strategy is and has been a work in progress at best.

The conundrum for Yahoo in recent years has been its inability to develop an identity and sell that to employees, advertisers, partners and consumers. Yahoo has some great piece parts -- messaging used by hundreds of millions of users worldwide; a sports brand that stands apart from other web properties and strong content plays in news and finance.

Yahoo has yet to find a leader who has the vision to frame those pieces into cogent opportunity that would lead a transformation resulting in a 21st century media-technology power.

Morse is not likely to be more than a short-term solution. No successful media company in recent memory has been helmed by a finance guy.

The company could look inward to EVP Ross Levinsohn former president of Fox Interactive or could begin the challenging search for a rare Steve Jobs-like leader who can spin the dials of the Yahoo Rubik's Cube and revive this once-iconic brand.