SAN FRANCISCO — With buyout vultures circling the Internet company, Yahoo CEO Carol Bartz may have to accelerate her timetable for engineering a turnaround if she wants to save her job.
Bartz has said it could take a couple more years to revive Yahoo after a long period of listlessness, but it appears the company could become a takeover target if its financial performance doesn't improve within the next few months.
That urgency was underscored last week as The Wall Street Journal reported that another falling Internet icon, AOL, is in preliminary discussions with a group of leveraged buyout firms about making a joint bid for Yahoo because its stock has been slumping for so long.
It's likely an opportunistic suitor would emerge if Yahoo's revenue keeps growing at a turtle's pace while rivals such as Google and Facebook sprint further ahead as advertisers shift more of their spending to the Internet.
Although Yahoo's market value has fallen dramatically in the past few years, buying the company would still be expensive and quite complicated. That's the main reason most analysts believe it would take a while to put together a deal, even if Yahoo disappoints investors yet again Tuesday when it reports earnings.
Yahoo hired Bartz in January 2009, convinced that she would prove the company is worth more than the $47.5 billion that Microsoft was offering to take over the company, a bid that Yahoo snubbed in May 2008.
Although Bartz has won praise for cutting costs to boost Yahoo's profits, the company's revenue through the first half of the year edged up by less than 2 percent. By comparison, Google's rose 23 percent during the same period.
"It's not necessarily Bartz's fault, but she had to know what she was getting into coming in," said Ryan Jacob, portfolio manager of the Jacob Internet Fund, which owns more than 100,000 shares.
The recent defections of several top Yahoo executives have stirred speculation that Bartz is wearing out her welcome as she approaches the midway point of her four-year contract.
If that's true, it could open the door for AOL CEO Tim Armstrong, 39, who could be seen as a more media-friendly, suave leader than the sometimes-cranky, profanity-spewing Bartz, 62. What's more, Armstrong's Internet background could be seen as a better fit, given that he built up Google's highly prosperous North American advertising business before leaving to become AOL's CEO last year. Bartz is more of a technologist, having previously been CEO of software maker Autodesk.
Yahoo declined a request to interview Bartz Thursday. The company also declined to comment on the reports of a possible takeover bid.
Despite Yahoo's struggles, there are several reasons why the company remains a takeover target.
For starters, Yahoo still boasts one of the world's best-known brands. Its Web site remains alluring enough to attract an audience of nearly 600 million, although people have been spending less time there as they hang out more frequently at trendier spots such as Facebook.
Yahoo also owns a 39 percent stake in one of China's fastest growing companies, the Alibaba Group. Analysts have estimated that selling Yahoo's Alibaba holdings and other Asian assets could fetch anywhere from $8 billion to $13 billion. That's a large chunk of Yahoo's current market value of $21.5 billion.
If AOL and the buyout firms decide to pursue Yahoo, a successful bid would hinge on whether the offer was high enough. Analysts seem to believe Yahoo's board would be hard pressed to turn down an offer ranging from $21 to $23 per share after spurning Microsoft two years ago. That would still be 32 percent to 44 percent above Thursday's closing price, though far less than Microsoft's final offer of $33.