New York — Facing the wrath of angry stockholders and rocked by continuous high-profile executive departures, beleaguered Yahoo last Thursday initiated another company-wide reorganization as the embattled portal continues to seek an effective management structure and executive hierarchy.
The Sunnyvale, Calif.-based Web giant — that recently stunned the corporate world by fending off a takeover attempt by Microsoft and an attempted coup by corporate raider Carl Icahn, as it haplessly watches dozens of high-ranking executives’ dash for the exits, before inking a controversial search partnership with rival Google.
Yahoo said it is setting up a new chain of command amid the turmoil forming three new groups: an audience products division, a similar U.S.-based product and advertising division and a data-focused insights strategy group, bolstering the operational control of President Sue Decker, as the company hones its independent strategy after rebuffing Microsoft Corp.
The company, owner of the No. 2 Web search engine, said the changes centralizes the management of once-separately run consumer services into a new “audience organization,” and improve coordination between product and engineering teams, Yahoo said today in a statement.
Emphasizing its goals of being the “starting point” for most Web users and a “must buy” for most online advertisers, in addition to the most attractive platform for developers, Yahoo will now centralize its product development operations.
It will also build a business section just for the U.S. and its end-users, advertisers and Web publishers. Additionally, Yahoo will form what it calls an “insights strategy team” and augment its technology infrastructure so that product designers and engineers will communicate and collaborate better.
Yahoo also pointed out that it is prioritizing what is branded as “cloud computing,” a new trend in which Internet firms such as Google, Microsoft, and Salesforce.com offer software programs as services that people use online instead of installing and operating on their own machines.
“These moves intensify the ability of our deep and talented team to build great products, grow our audiences and improve monetization globally,” said Jerry Yang, Yahoo’s CEO, in a statement.
However, the changes did little to restore investors’ confidence in the company. Yahoo’s stock fell almost 3 percent to close at $21.37 per share – the lowest level since Jan. 31, the day before Microsoft offered to buy the company for $31 per share. Microsoft subsequently added $2 to its bid, before withdrawing the offer on May 3, after Yahoo said it was not high enough.
“This is greatly akin to moving deck chairs on the Titanic,” said Charlene Li, an analyst at Forrester, who has followed Yahoo for years. “They have a massive challenge ahead of them, and the challenge does not change.”
The series of organizational movements marks at least the third major shakeup at Yahoo! since late 2006, when media head Lloyd Braun and COO Dan Rosensweig left the company and Decker was promoted from CFO to lead one of three other new groups formed at the time.
Since then, Yahoo! has replaced former CEO Terry Semel, combined its search and display ad sales teams, added another new group (global partner solutions) and faced a sequence of high-profile executive departures, including top sales executives Greg Coleman and Wenda Harris Millard.
“The move is directed at better taking advantage on the development of Web advertising through Yahoo’s vast audience. Yahoo boasts over 500 million visitors to sites ranging from e-mail to search to finance, news and sports.”
The restructuring was underway for a “couple of months” and was delayed while Yahoo negotiated with Microsoft, said Decker, 45. Now that the Microsoft talks are over, Yahoo has refocused on a three-year plan announced in March aimed at boosting profit, she said. Some executives have chosen to leave, while others were ousted as part of today’s changes, she said.
“Transition is a natural part of change,” Decker said today in an interview. “Ultimately what is going to drive the confidence in shareholder value creation is the seeing of acceleration in profitability. We have been very clear that this year is a transition year.”
The Reorganized Teams
Reporting to President Sue Decker will be three new teams:
Hilary Schneider, Yahoo’s executive vice president for partner solutions, will now be in charge for all marketing in the U.S., the company said in the statement.
Prior to joining Yahoo in September 2006, she was working at Knight Ridder Inc., where she helped manage newspaper operations and headed its online operations. Her first job at Yahoo was running classified advertising, travel and shopping sites. She took over the partner group when it was formed in August 2007, and oversaw sales, corporate partnerships and the online channel division.
The Audience Products Division, which will oversee product strategy and product management and will be led by Ash Patel, former manager of Yahoo’s Platforms & Infrastructure group.
Yahoo also created an “insights strategy team,” whose leader has yet to be named. That person, who will ensure companywide use of data and analysis, will be named “within the next few weeks,” according to the statement.
The U.S. group will work in coordination with three current international business units for Asia, Europe and emerging markets. No management changes were made there, Decker said.
Additionally, Ari Balogh, who joined as chief technology officer five months ago, has taken on increased powers and will consolidate separate technology platforms used to run different consumer services into a group led by Venkat Panchapakesan.
Balogh will be responsible of building a “world class” cloud computing and storage infrastructure, unifying platforms and improving the communication between product developers and engineers.
“These new organizational structure will enhance Yahoo’s products and speed up decisions,” the company said.
“What this realignment will do is allow us to have a more coordinated approach to global product management around key audience products” such as e-mail and Internet searches, Decker said. “We feel this will unleash the ability to introduce world-class consumer products and unleash our ability to go to market in a more coordinated, accountable way.”
All three groups will report to Decker, who was promoted to president when Yang took over the CEO Job in June 2007. Decker joined Yahoo in 2000 as chief financial officer.
“Maybe everything is fine, but you do have to wonder what the company is doing and whether it is really moving in a productive direction,” said Carl Tobias, a law professor at the University of Richmond.
Analyst Rob Enderle of the Enderle Group in Silicon Valley compared Yahoo’s restructuring with the crew of the doomed transatlantic Titanic ocean liner scrambling to correct course when it was too late.
“Yahoo is making vital changes that would have helped them steer clear of the iceberg, but unfortunately it comes after they hit it,” Enderle said.