LIVE: Yahoo CEO Carol Bartz Speaks

At the Morgan Stanley technology conference, analyst Mary Meeker is interviewing Yahoo CEO Carol Bartz. I’m listening on the Web, since media wasn’t invited to the conference. I think it’s Bartz’s first major public appearance. And outgoing CFO Blake Jorgensen is here too; obviously, he hasn’t checked out yet.

The upshot by the end: Not a lot of news, but it’s clear Bartz has jumped deep into operations, and many changes are afoot. Some operations sound like their days are numbered. But she remained coy on whether she’d sell search to Microsoft. Even if she does, she’d want to keep access to the search data.

Here’s the blow-by-blow:

Meeker: What has surprised you on the upside and on the downside? Bartz: Every week, I'm pleasantly surprised. I want the users to wake up in the morning, log onto Yahoo, check out what's important, and do the same at night, and as many times in between as possible. We owe them an easy, fun, non-frustrating experience. And no abandoned products floating like debris in space.

Advertisers want ease of use, they want our ad networks to work. Employees--we're ahead of the curve at Yahoo. We're on the way up, while others are on their way down. They want to work for a winning organization.

Stockholders want the stock up. So do I.

This is a whole new space for me. Internet advertising has gotten kind of same-old, same-old the last couple of years. Advertisers want better targeting. Nobody has the answer. They're asking us (what to do).

Meeker: Prospects for ad market--are they coming to Yahoo hoping online will save them, or are they pulling back? Bartz: Certainly the ad market is under pressure. They're looking for more bang for the buck. TV gets way too much of the spend. Print just gets worse. There's a rush to value. Damn straight it's a tough market.

Jorgensen: Yahoo saw Class 1 ad prices (premium, branded ads and sponsorship programs on major Yahoo sites) stabilize so far in the first quarter. (Problem is, at a pretty low level.)

Bartz: I think Class 1 will come roaring back. People want the big experience. They're not abandoning that.

What they (chief marketing officers) have told me is, "We'll experiment with anything. We've gotta see what works now."

Meeker: What's the response to the recent management reorg? Tone of morale on scale of 1 to 10? Bartz: The hope is a 10. The skepticism naturally is there because Yahoo--what a name... What was most broken was how people made decisions and getting product and editorial moving fast. Too many "two-in-a-box" management setups.

Jorgensen: Morale is clearly better than it has been. Over the last four or five years, there's been a lack of clear decisionmaking. People welcome that. Even if the decisions are not in their favor.

Meeker: What's core now for Yahoo? Bartz: Front Door, sports, news. And the brilliant sales force. Everything's up for evaluation. (She has a "wall of shame" of products that aren't up to snuff or were essentially abandoned.)

Let's make sure we have a very fine-tuned operation. Figure out where we should do M&A.

Meeker: No draconian moves necessary? Bartz: I'm not afraid of it for a second. But ... smart isn't just cutting expenses or prices. It's cutting bad expenses.

Jorgensen: Looking at whether the user experience is the best it can be. Is there a way to improve the user experience by removing ads?

Bartz: For instance, cutting ads on Yahoo Mail on low-bandwidth connections in international markets.

Meeker: Any new inventory to be found? Bartz: I hope so.

Meeker: Why is Yahoo gaining market share in search? (Barely, it must be said.) Bartz: They're staying with. We have absolutely stabilized search. We have been investing. The technologists are good. And we'll continue that.

Meeker: What's the latest thinking on the calls for Yahoo to get out of search (via a deal with Microsoft)? Bartz: Search data is extremely important. I said this to Mr. Ballmer: I'm not going to negotiate with my 50,000 favorite friends. We are going to negotiate as companies negotiate, and that is privately.

Meeker: Why aren't Yahoo ads more effectively targeted? Bartz: On behavioral targeting: Being able to watch what a user does as he roams around the site ... say a mom with a baby--let's serve up relevancy to her. We're going to get better and better at that.

It's a long slog. But I like the long slog. If it was an easy path, we'd have to dream up something else. We want to be able to follow them around and have some ideas. Who wants the blue link (search)? That's not fun anymore.

Questions from audience now: Q: Something about U.S. vs. international Bartz: Europe has been managed too many times by too many people. Frankly, a lot of the European properties and content were some of the abandoned ones. Plans M&A, some partnerships, but mostly getting best-of-breed people on the ground.

Jorgensen: Many mobile partners--trying to establish the user platform and integrating into core product (on Web/PC).

Q: Similarities in management organization between Autodesk and Yahoo? Bartz: There's many ways you can go. Management reorgs fix yesterday's problems and create tomorrow's problems. Yahoo had gotten fairly convoluted. Organizations were built around people, not the best organization. There's a lot of my experience I can draw on, definitely.

Another Meeker question: Can outside services, especially social media, be integrated into my Yahoo experience? Bartz: That certainly would be high on my "wouldn't it be wonderful" list. Social media very important. I'm not a big NIH--I don't believe we can (do) the next Facebook.

Jorgensen: Testing new version of home page, opening up to other providers. You'll see much more interaction with outside partners.

Bartz: Our (current) home page is very old-fashioned.

Meeker: Will Yahoo's newspaper consortium be material in the next few years? Bartz: Doesn't answer directly. Met with three leaders of the consortium. 30,000 sales people in these newspapers. They are turning to selling online like gangbusters.

Q: What have you learned in the first 35 days about linking search and display ads? Bartz: While optimization is good, they are linked in the minds of the top 200 advertisers. We have to have the information that search tells us the customers intended--regardless of whether we manage it or someone else manages it.

Meeker: It sounds like you're saying Yahoo has gone from a weak position to a strong one in search (vs. Microsoft, though not mentioned by name). Bartz: Yes, ma'am.

Q: Guy with a young company (who says he once worked with Bartz at Autodesk) says consolidating ad spending on Google AdSense and Yahoo, just those two properties. Bartz: Sounds happy with this comment, no surprise.

Q: What about Yahoo Mail and Yahoo Maps? Bartz: Mail is really important to us. That's a core property for us. Maps? I don't use Yahoo Maps. I use Google Maps, I'm just telling you.

Jorgensen: Part of the challenge on Maps is ... we chose to partner a long time ago. I don't see that we would jump in to go much deeper on the map side.

And that's it.

Before it's here, it's on the Bloomberg Terminal.