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No Virtual Numbers for Yahoo!'s CFO

It was a defining moment for Yahoo!'s chief financial officer, Susan L. Decker. Just nine months after she joined the outfit in June, 2000, the high-flying Internet portal found itself engulfed in turmoil. The board had asked CEO Timothy Koogle to step down. And as Yahoo's bean-counters crunched the data on its just-completed 2001 first quarter, they were finding that revenues had dropped 22%, and profits had dissolved into red ink. Worse, things were deteriorating even as Yahoo's chief competitor, America Online, boasted of record advertising and commerce revenues.

Yahoo (YHOO) had one last chance to save some face, however. During that quarter, it had snared a $9 million termination fee from an advertiser that had pulled out of a long-term deal. That amounted to 5% of Yahoo's quarterly revenue, meaning that the portal could use it to bolster sales and paint a slightly better picture for Wall Street. The tactic would be perfectly legal. And with Yahoo under backbreaking pressure, it was certainly tempting. But Decker put her foot down. She ruled that Yahoo would have to break this deal out from the rest of its revenue, even though doing so would likely deepen investor disappointment with the results. Otherwise, recalls Decker, Yahoo's earnings report "would have painted a picture that wasn't accurate."

BULLETPROOF CREDIBILITY. Today, such candor looks prescient. While AOL's aggressive deals have since sparked a Securities & Exchange Commission probe and forced AOL Time Warner to restate earnings, Yahoo is two years into a turnaround that has returned it to profitability. And its stock price is up 200% in the past eight months, in no small part because of the bulletproof credibility Decker has established with Wall Street. Says Salomon Smith Barney analyst Lanny Baker: "She was aggressive about talking economic reality, improving Yahoo's transparency, and letting it take its lumps."

Decker, who spent 14 years at Donaldson, Lufkin & Jenrette (DLJ) as an analyst and research director before moving to Yahoo, has played no small role in Yahoo's transformation from fading Internet light to revitalized cyberspace heavyweight. Perhaps her earliest contribution was bringing sanity to the metrics used to value the Internet outfit. While numbers like "total page views" and "e-commerce transactions enabled" were pivotal for Yahoo in the late 1990s, Decker came in wielding two seemingly old-fashioned metrics: "Revenue per user" and "revenue per employee."

She also pushed Yahoo's managers and employees to become numbers jocks who could better understand how each of their units contributed to such equations. Now, the portal's "employees are familiar with things like ARPU [average revenue per user]. They know how each product contributes to EBITDA [earnings before interest, taxes, depreciation, and amortization]," says Rich Godwin, Yahoo's director of barter marketing. "All of this goes back to Sue."

POWWOW PARTICIPANT. Even so, Decker, 40, isn't a stereotypical bean-counting CFO. She frequently powwows with CEO Terry Semel, as well as with Chief Operating Officer Dan Rosensweig, to chart Yahoo's strategy. In 2001, for instance, she lobbied relentlessly for Yahoo to get involved in the listings businesses, the online version of lucrative newspaper classifieds. This culminated in the $435 million acquisition of careers site Analysts predict that HotJobs will contribute $80 million to Yahoo's top line in 2003, despite the tepid labor market. Longer term, analysts think that the online recruiting market will grow 18% annually through 2008.

Decker's emergence at the pinnacle of a high-tech business surprises few of her colleagues, past or present. Upon joining DLJ as a research analyst in 1986, Decker immersed herself in the minutiae of media, publishing, and advertising stocks. She had a knack for distilling bits and pieces of information gathered through dozens of meetings and understanding the bigger picture, often better than the companies themselves. "[Executives] didn't always like her opinions of their company or industry, but they respected her," says Credit Suisse First Boston investment banker Jill Greenthal, who worked with Decker at DLJ.

She quickly rose to the top of her profession: She was rated a No. 1 analyst six times by Institutional Investor magazine in at least one of her coverage areas. In 1998, Decker was promoted to run DLJ's entire research operation. "She was one of the top 10 talents I've ever worked with," says Stu Robbins, Decker's former boss at DLJ and now chairman of SoundView Technology Group.

THE GENDER FACTOR. Still, stock research didn't fully satisfy her. So in 2000, Decker dialed up Yahoo co-founder Jerry Yang for an informal chat about opportunities in the Internet sector. Yahoo execs had been impressed with Decker's acumen ever since she began covering their company as an analyst. Just three months after the stock market's apex, Decker moved her family to the Bay Area to take over as Yahoo's CFO -- a gig that would soon resemble a rollercoaster ride.

When evaluating her career thus far, Decker is uncomfortable including her gender in the discussion. After all, she says, she hasn't run into any glass ceilings that have hindered her aspirations. "I don't think of it in that way," says Decker, a mother of three. "I just come in each morning and think about how we're going to try to succeed."

It's that kind of determination -- and plain talk -- that has thus far served Yahoo so well. By Ben Elgin in San Mateo, Calif.

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