December 6, 2006

Yahoo's COO, Dan Rosensweig and another top executive are leaving the company as part of some major restructuring changes announced late yesterday after the markets closed.

Yahoo spokeswoman Joanna Stevens also added that Lloyd Braun, the head of Yahoo's media and entertainment group is leaving.

"John Marcom, senior v.p. of international operations is also leaving Yahoo soon" she said. Stevens declined to provide more details. Yahoo's new structure should quicken the pace of innovation as the company vies with Google and Microsoft for online ad dollars, and tries to recover from a number of technical and financial setbacks that happened in 2006.

Meanwhile, Chief Financial Officer Susan Decker will take over a reorganized advertising unit but will continue to serve as CFO until a replacement is found, the company said.

The new leadership assignments will take effect on January 1 next year, and the reorganization is expected to be completed by the end of March 2007. However, Stevens did say that no layoffs were being announced at this time.

Yahoo, which has suffered this year from important search market share losses, the delay of its new ad platform and a large drop in net profits, is realigning its business groups under three new operating units. The executives heading up the new units are set to report directly to Chief Executive Terry Semel.

Semel said "we need a revitalized structure to heighten accountability and streamline decision making while at the same time allowing us to better focus on serving our key customers", in a blog posting.

The new Audience Group will oversee search, media, communities and communications. An executive search has been launched for an executive to help lead the new group. The new Advertiser & Publisher Group, which Decker will oversee, will combine marketing, sales and distribution partners to create a global advertising network.

The new Technology Group, headed by Chief Technology Officer Farzad Nazem, will tighten product-engineering integration, help build new social-media environments and speed up development of next-generation ad platforms, Yahoo said in a statement late yesterday.

The new Advertiser & Publisher Group will combine marketing, sales and distribution partners to create a new global advertising network at Yahoo.

Although Decker will be stepping out of her long-time role as CFO at Yahoo, the task of heading up the sales and publisher group will not be all that unfamiliar, one analyst said.

"Susan Decker joined Yahoo when it was pretty early in its formation as an organization, and was instrumental in helping it develop its strategy, including sales," said Brian Pitz, an analyst at Bank of America Securities. "She really gets it" he added.

Decker's shift to an operational role in heading up the advertising and publishing group could bode well for her to one day lead the company as CEO, Pitz said. He was quick to point out however, that Semel is doing a good job running the company and doesn't see him leaving anytime soon.

"The Internet is continuing to grow and evolve at a very rapid pace, and we're reshaping Yahoo to be a leader in this new transformation, just as we did successfully 5 years ago," Semel said in a statement.

Rosensweig, who joined Yahoo in 2001, was previously president of C-Net Networks, the publisher of News.com. "When we recruited Dan five years ago, we brought him on to help revitalize the company," Semel said in his blog. "Since then, he's helped grow our global audience to one in every two Internet users, introduce social media to our users, create a leading mobile infrastructure, attract a record number of advertisers and position Yahoo for its next phase of growth."

One analyst said Rosensweig's impending departure comes as no surprise to Wall Street and that many had expected it. "We had heard for a while that he wanted to leave and do something new, like maybe get into politics," Pitz said.

Panama is the name of Yahoo's new search-advertising platform. The platform, whose first phase went live in October, had previously been delayed by a quarter. In its second phase, the marketplace design will include more factors for ranking ads, for example.

Some industry insiders are concerned about the timing for Yahoo's reorganization, given Panama's status. "We think this news will be a near-term negative, as it increases execution risk during a very transitional and critical time," Anthony Noto, a Goldman Sachs analyst, noted in a research note.

"Execution risk increases meaningfully when a new leader is forced to deal with unintended consequences in addition to learning his or her new role," added Noto.

Source: C-Net News