How to Survive a Direct Attack

The annual shareholder meeting of Yahoo! Inc. last month was an "unlikely lovefest" — according to the report of the event in the New York Times — unlikely because the company's stagnant stock price and poor performance against its competitors would seem to have invited a more critical session. The lovefest carried through more than an hour of glowing outlook from the board and management as well as softball questions from the shareholders.

But then, a man called Steve Landry took the floor. Landry identified himself as a personal investor who also advised institutional investors holding more than a million shares of Yahoo! He then proceeded to attack the company in general and its Chief Executive Officer, Carol Bartz, in particular. Addressing her directly, he said, "It came out earlier this week in a blog that the board is secretly talking to other potential CEO candidates. I've heard similar details and believe that it's true." He then went on to say, "the last thing Yahoo needs is a lame duck CEO... The buyout talks of your contract need to start today and a search needs to be accelerated."
According to a transcript of the webcast, Bartz responded:

Thanks for your opinion, the bloggers and the rumors. What else? Wonderful — that was certainly a downer. So again, thank you for coming to Yahoo! We are working very, very hard in this company and managing our assets and we will see the benefit of that.

Reports of the exchange in the major financial press — the Times, Wall Street Journal, the New York Times, and CNET — carried only the central phrase of Bartz' answer, "that was certainly a downer." This left readers with the impression that Landry's direct attack had damaged her.
Bartz did the right thing in ending her answer on an upbeat note, but made two tactical errors at the front end of her response, both of which outweighed and therefore overshadowed her positive effort.
1. She failed to address the issue in the attack
2. She validated the negativity
Instead, Bartz should have said something along the lines of,

Yahoo!'s policy is not to comment on rumors and blogs. What I can tell you is that we are working very, very hard in this company and managing our assets and we will see the benefit of that.

These two issues provide larger lessons for how any presenter should handle tough questions.
1. Presenters have every right to take every opportunity to make positive statements about their companies, but they must first earn that right by addressing the central issue in the challenging question or statement. They may agree, disagree, admit, correct, or deny the issue, but presenters cannot leave it ignored. Yahoo!'s policy is not to comment on rumors and blogs.
2. Negative facts may be sad but true — Yahoo!'s stock price has been stagnant — and presenters can actually be forthright about it, but they cannot validate the negativity by letting it hang, twisting in space: that was certainly a downer.
Instead, presenters can admit to negative facts — so as to be transparent — but then, after a brief, very brief, admission, they must immediately follow it with an upbeat counterpunch. Yes, the stock price has been stagnant, but when you consider the outlook for the new products that you heard about today and the fact that we are working very, very hard in this company and managing our assets, I am confident that we will see the benefit of that.