Yahoo Chief Says Facebook Is Bigger Rival Than Google

Yahoo CEO Carol Bartz
Yahoo! Chief Executive Officer Carol Bartz speaking in New York. Photographer: Ramin Talaie/Bloomberg

Yahoo! Inc. Chief Executive Officer Carol Bartz said social networking leader Facebook Inc. has emerged as a bigger rival than Google Inc., owner of the biggest Web-search engine.

“Our greatest competitor probably is Facebook, more so than Google,” Bartz said at an event sponsored by Bloomberg Businessweek in New York yesterday. “They’re a hot site, but there’s room for more than one of anything.”

Bartz said her company once weighed buying closely held Facebook for about $1 billion and that her acquisition strategy is to focus on companies that bring users, content, engineers and advertising technology. Yahoo is adding features to keep from losing Web surfers to sites such as Facebook and Twitter Inc. that make it easier to interact with friends.

The second-year CEO has cut costs, pared extraneous products and focused Yahoo on news, sports and other content. She also struck a partnership that lets Microsoft Corp. handle the mechanics of Web search, while Yahoo oversees advertising sales. She’s been less successful reviving growth and keeping pace with newer, faster-growing Web companies.

As Facebook’s user base has surged past 500 million, its value has risen to more than $40 billion, according to private- share trading site SharesPost Inc. Yahoo, based in Sunnyvale, California, has a market capitalization of $22.1 billion.

Not Going Private

Asked for her thoughts on whether Yahoo should go private, Bartz said she has no plans to do so. She also said Yahoo will remain useful to users because of its ability to personalize and organize content from the Web’s 240 million sites.

“For the most part, people pretty much want this curated for them,” she said.

Bartz also said Yahoo’s sales will “start really taking off” in 2012. The company’s third-quarter revenue of $1.12 billion, excluding money passed on to partner sites, fell short of the $1.13 billion average of analysts’ estimates, according to data compiled by Bloomberg.

Yahoo rose 8 cents to $17.02 at 4 p.m. New York time in Nasdaq Stock Market trading. The shares have gained 1.4 percent this year.

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