What Yahoo Employees Can Expect From Their New CFO
This story was written by Joseph Tartakoff.
For all the coverage of Yahoo's new CFO, there's been little discussion of his track record at his last companysemiconductor firm Altera Corp. It can basically be summarized in three words: continuous cost cutting. And that could mean more restructuring on the way for Yahoo (NSDQ: YHOO) employees. At a tech conference held shortly after he took over as Altera's CFO in 2007, Timothy Morse explained the philosophy that he internalized during 15 years at General Electric: "Growth companies and high-tech companies have traditionally been very successful in innovating the topline and finding new ways to grow; it hasn't always been that balanced equation looking at capital and cost structure."
To rectify that, he said he had assigned 130 employees to an "internal simplification" initiative. A year later, during a quarterly call in which he said that operating expenses had fallen 4 percent, he was asked whether there was room for even more cost cutting: "We've got, as I said, teams of people across the company looking at all of our fundamental business processes to find ways of simplifying and streamlining them. ... If costs have to go up year-over-year, than they're going to go up far, far less than revenue is."
Between 2006 and 2008, Altera's revenue increased 6 percent. At the same time, operating expenses dropped almost 8 percent. (Selling, general and administrative expenses took an especially hard hit. They dropped almost 17 percent.) In a report this morning, Barclays Capital Analyst Douglas Anmuth also says that under Morse, Altera's operating margins increased from 23 percent in the first quarter of 2007 to 31 percent in the second quarter of 2008 "before being negatively impacted by macro & mix." (Morse's cost cutting initiatives never resulted in mass layoffs at the company; the Associated Press reports that Altera's workforce actually grew during Morse's tenure, although Altera did lay off 33 employees in March.)
Morse's mantra seems to largely jibe with that of CEO Carol Bartz, who has already simplified the company's corporate structure. Anmuth says that he expects Morse to "expand this effort by focusing on cost controls and low-hanging fruit, and we believe there is much to be had."
By Joseph Tartakoff