Photo: Owen Thomas, Business Insider
Earlier this week, just before new Yahoo CEO Marissa Mayer got in front of the company’s employees and announced a turnaround plan, the news broke:Long time CFO Tim Morse would not be attending the meeting.
This was surprising to some because Mayer and Yahoo shareholders owe Morse a lot of gratitude.
During his time at the company, he served as temporary CEO. He also deeply cut costs and even managed to grow Yahoo’s bottom line as revenues shrank.
Morse is also leaving Yahoo only days after finally completing the transaction of a life time; he sold a portion of Yahoo’s stake in Internet company Alibaba, netting Yahoo $4.3 billion. Most of that money will be returned to shareholders in the next few weeks (or perhaps days).
All that said? It’s understandable why Mayer replaced Morse.
He was the choice of a former CEO. Mayer needs people in the C-suite that owe their allegiance to her. She needs believers. She, in turns, needs to have full faith in the folks she leans on most.
For Morse’s part, a source close to the now former Yahoo CFO says that he is happy to have gotten the axe: That he was tired, fully vested, and thinks Yahoo “is a crazy place right now.”
He also got a huge severance package and he is already close to having another job.
Beyond that, we’re told that Morse was probably going to find his own way out of company at some point soon, no matter what. He might not have even stayed if Yahoo veteran and former interim CEO Ross Levinsohn had gotten the job. Morse has gone through five CEOs since he joined Yahoo – including himself in an interim role for a time. No wonder he wanted out; that much turmoil is exhausting.
What’s more, from what this one source is telling us, Morse’s style conflicted with Mayer’s. He is a meticulous cost-cutter. Mayer is not.
In her two months, she’s given Yahoos some Google-style perks–most famously free food and free iPhones. None of those things are actually free, and our source close to Morse says he does not believe Yahoo will be able to grow its revenue fast enough to make it all worthwhile. (Our view is that Mayer had to fix morale and that a few million dollars for food and phones is nothing for a company with revenues in the billions.)
This source says one particular expenditure by Mayer especially drove Morse up the wall.
Before Mayer joined Yahoo, the company had a modest Christmas party planned for December, to be held in San Jose. After Mayer joined, she had the date of the party changed: it conflicted with her own personal Christmas party, which is a must-attend by the biggies in the Valley. Then Mayer decided to throw the party in San Francisco, where space is much more expensive. According to this source, the cost of the shindig went from ~$100,000 to ~$3 million.
Countering this source’s view is new CFO Ken Goldman’s reputation as a cost-cutter himself.
In the end, Mayer was smart to part with Morse, if only because he may not have faith she can do the job.
rumour has it she told the board that Yahoo will double its revenues in the next two years.
“Tim doesn’t see it,” says our source. “He’s thrilled he won’t be the one holding that bag.”
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