Yahoo CEO Carol Bartz was fired on Tuesday, as the deep internal problems at Yahoo spilled out into public view. Bartz’s firing was not surprising – it is a well-known fact in the industry that Yahoo is mismanaged. This was most obvious in Search, where Bartz gave up Yahoo’s most valuable asset (Search market share) because it couldn’t stomach a fight with Google. Instead, she entered into an ill-conceived Alliance with Microsoft. To determine the fate of that Alliance, it helps to understand what a mess Yahoo is right now. The incompetence at Yahoo goes to the Board-level, as shown by the way they handled Bartz’s termination.

The timing and method were amateurish. Bartz emailed the company on Tuesday to say she had been fired via phone. A well-executed succession would have been handled quietly and professionally last week, while everyone was on vacation.

Instead, all of the stories today are about how Yahoo is hiring bankers to carve it up into pieces and sell it off. This is one step removed from holding an auction on the courthouse steps.

So what does this mean for the Search Alliance with Microsoft?

The Microsoft-Yahoo Alliance will end. Either Yahoo will sell Search to Microsoft, or someone else will step in and break the Alliance. Either way, this quasi-Joint Venture he-said-she-said BS will end. In the long run, this is good for the Search industry.