Exodus At Yahoo Continues As Reorganization Impending
Los Angeles – For more than two years, executives and other senior employees have been leaving Yahoo at a steady, unrelenting trickle. The executive exodus is an unspoken rejection of the current leadership and the board.
Yahoo Inc.’s management positions are rapidly slimming down as the Internet pioneer fends off a shareholder mutiny threatening to culminate in the firing of Chief Executive Jerry Yang.
Three more executives have decided to jump ship, as it envisage to improve earnings and convince investors it is worth at least as much as a bid it rejected from Microsoft Corp., reports said on Thursday.
The dribble has turned into a deluge. In just a matter of days after Yahoo’s announcement last week that merger talks with Microsoft had ended and that the company had as an alternative chosen to sign a search advertising partnership with its No. 1 rival, Google, three executive vice presidents, two senior vice presidents and handful of other well-regarded employees have announced their intention to leave.
The latest to leave reportedly are: Qi Lu, an executive vice president in charge of Yahoo’s search and advertising technology; including Brad Garlinghouse, a senior vice president who oversees communications tools like mail, known for a 2006 “Peanut Butter Manifesto” memo which called for a radical overhaul of the company; and Vish Makhijani, a senior vice president involved in search.
“All were responsible for critical areas of Yahoo’s business.”
The executives who resigned are carrying a lot of knowledge and institutional understanding out the door. Some have grown tired of the ongoing battle and uncertainty over Yahoo’s future and some are not enamored of the impending major reorganization.
Yahoo declined to confirm the departures. In a statement, the company said: “We have a deep and brilliant management team across all areas of the company.” It said that Yahoo is experiencing “the attrition that is to be expected in the Internet industry.”
Among the newly departing executives, Garlinghouse is perhaps the best known outside of Yahoo. He is senior vice president for communications and communities, and is responsible for vital products like Yahoo’s e-mail and instant messaging services, Yahoo Groups and Flickr, the popular photo sharing site. In the famous memo, he said the company was spreading itself too thinly over various opportunities, like a layer of peanut butter. “I hate peanut butter,” he wrote.
Makhijani, general manager of Yahoo’s Web search business, is leaving to join Yandex, Russia’s leading search engine, according to a Yahoo insider, and Qi Lu, the top engineer for Yahoo’s Panama search marketing platform, also were leaving the company, which assemble a spreadsheet of defections.
Garlinghouse and Makhijani did not return calls or answer e-mail inquiries seeking comment. Lu could not be reached.
The mass exodus is digging out Yahoo’s senior management ranks. The exodus comes as plans for a major reorganization are taking shape and could be announced as early as next week, according to the people with knowledge of the management departures.
The management turmoil appears related to a major reorganization that is being pushed by Yahoo President Susan Decker, who wants to conclude as early as next week, according to a Wall Street Journal story that cited unnamed people familiar with the matter.
Although the precise outline of the organizational changes is unclear, Hilary Schneider, a protégé of Ms. Decker who is executive vice president for global partner solutions, is expected to assume greater responsibilities, these people said.
Schneider, a Yahoo executive vice president who is one of Decker’s most trusted subordinates, could wind up with expanded responsibility in a streamlining aimed at improving communication between the company’s product groups and overseas sales division, the Journal reported.
The Sunnyvale-based company has so far lost four prominent leaders in the past week: two executive vice presidents, Jeff Weiner and Usama Fayyad; and the creators of Yahoo’s Flickr photo sharing service, Stewart Butterfield and Caterina Fake.
A senior Yahoo executive said reorganization “is the worse possible thing they would do at the moment. In a time of total instability, the last thing you want to do is make people nervous about their jobs.” He spoke on condition of anonymity because, although he was also considering options outside of Yahoo, speaking out could jeopardize his employment.
It is also raising new questions about the future of the company and its top executives. Analysts say that the departures suggest that Jerry Yang, the chief executive, and Susan L. Decker, the president, are increasingly isolated.
The exodus could deteriorate Yahoo’s unsteadiness as Yang and his remaining lieutenants scramble to regain their bearings after spending five months grappling with an unwelcome takeover bid from Microsoft Corp.
In the meantime, Microsoft is holding no secret that it perceives the apparent disarray as an opportunity. In February, Microsoft’s chairman, Bill Gates, said that Yahoo’s talented engineers were among the reasons Microsoft was seeking to acquire the company. Now Microsoft is making new overtures to those engineers.
On Wednesday, the company took out a full-page ad in the San Jose Mercury News, whose distribution area includes Sunnyvale, where Yahoo is based, and other Silicon Valley cities, to recruit Internet search specialists at its valley campus.
Just a few weeks ago it was difficult to imagine what could be worse than key investors’ sheer loss of confidence in Yahoo’s management. Now founder and Chief Executive Jerry Yang and Decker seem to have lost something even more valuable: the confidence of employees.
“Executive possession is a fact of corporate life, but Yahoo is stepping on dangerous ground with the number of key executives who are abandoning ship.”
“Former Yahoos, ferociously loyal to their old company and to Yang, are watching the stunningly rapid implosion with shock and sorrow.”