Almost a week after Microsoft (NSDQ: MSFT) unveiled its $44.6 billion bid for Yahoo (NSDQ: YHOO), former chief sales officer Wenda Harris Millard, now president of media for Martha Stewart Living Omnimedia (NYSE: MSO), offered some reasons for how her previous employer wound up in its current dismal state. During an interview at the DeSilva + Phillips Media Dealmakers Summit, Rafat Ali, the publisher and co-editor of ContentNext Media, paidContent.org’s parent, asked if she still owned any Yahoo stock: “Not since last Friday,” Millard replied.  The full audio of the interview is here for download (MP3, 21 minutes, 19.5 MB). Highlights after the jump…

Other highlights from the interview:

-- Obsessed with Google: So where did Yahoo’s problems begin? Millard: “This is absolutely inevitable, entirely predictable and it is all about what happens when you lose sight of what business you’re in and who your customer is. Yahoo’s monomaniacal obsession with Google (NSDQ: GOOG) and its thinking that Google was its only competitor led to this. In fact, (in) a company where 90 percent of your revenue comes from advertising, it would seem the primary competitor would be broadcast networks.”

-- Either/or strategy: Ali asked if Yahoo should have given up its focus on search. Not at all, she said. Yahoo chose “an ‘either/or’ strategy, and it should have been an ‘and’ strategy. There is no singular solution. It’s not a zero-sum. They should be in the search game and they should be in the brand advertising game. They owned the brand advertising space and decided to completely abandon it.”

-- Blinded by science: The impact of MSFT/YHOO is that it will reduce choices for advertisers. You have two goliaths – after two other goliaths are combining. All this will refocus a business that’s both art and science unduly on science. “Scale matters a lot in this business. But it’s not a business only of science. With the Google/DoubleClick combination, and the potential Microsoft/Yahoo combination, it’s like the scientific community is taking over the advertising business - and the ad business is not about algorithms.”

-- Advertising for recession?: “It’s pretty clear that the advertising business has decided it is going to be in a recession. Whether or not the rest of the country is, [the ad community has] decided.”

-- Acquisitions?: Millard was as vague as could be when asked about MSLO’s acquisition and investment plans. She said the company will concentrate on building up its weddings franchise - which is what MSLO said in December when it decided to close home decor mag Blueprint in December. (MSLO reports earnings next week so this is a quiet period.)

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