Yahoo reorganizes ... again

Yahoo announced another organizational shakeup Wednesday, as it struggles to improve its sales efforts

Yahoo has shaken up its top management ranks once again, as the struggling Internet giant continues tweaking its organizational structure to boost advertising sales, its main source of revenue.

In the latest shift, Yahoo President Susan Decker announced in a memo to staff that the company's top sales executive is on his way out and that a new global sales organization has been created.

Major management shakeups have become frequent at Yahoo in the past 10 months, as the company urgently tries to compete better, not only against archrival Google but also against nimble startups, and turn around its generally disappointing financial performance.

Brian Bolan, a financial analyst at Jackson Securities, expects Yahoo to unveil at least one more major reorganization by mid-October, at the end of the 100-day, top-to-bottom review the top managers announced during the company's last earnings conference call in mid-July.

That they decided to push out this latest change now as opposed to waiting until the end of the 100-day period shows that management is trying to be proactive in fixing what's broken, he said.

"This is a statement saying 'we're going to continue to make these changes and we'll make them as needed as opposed to waiting,'" Bolan said. "It's a positive sign that they're following through with what they said they would do."

Two months ago, co-founder Jerry Yang took over as CEO and chairman from Terry Semel, while Decker, former chief financial officer and head of Yahoo's advertiser and publisher group, became president, a drastic change driven by widespread investors' dissatisfaction with the company's direction.

In particular, Semel took the fall for Yahoo's inability in recent years to profit as heavily as Google has from search engine-based pay-per-click advertising and for missed opportunities in hot markets like social networking and video sharing, where the company lacks strong services.

A week after Semel's demotion to non-executive chairman, Yahoo combined its search and display advertising sales teams in the U.S. It was an attempt to extend the company's long-standing, core display advertising client relationships to the pay-per-click business, which generates about 40 percent of the industry's online advertising.

Just seven months earlier, in December, Semel had rolled out a major reorganization, creating three main business units to focus on Yahoo's key customer segments: consumers, advertisers and publishers. At the time, Semel also announced that Dan Rosensweig, then chief operating officer, would leave the company.

That reorganization was preceded by a widely publicized internal memo that was leaked to the media in November and came to be known as the Peanut Butter Manifesto. In the scathing memo, Brad Garlinghouse, Yahoo's senior vice president of communications and communities, called for a major reorganization, saying the company lacked "a focused, cohesive vision" that had made it "reactive" and eager to be "everything to everyone."

Since the uproar over the Peanut Butter Manifesto and the ensuing shakeups, Yahoo has seen quite a few changes in its upper management ranks. In addition to Semel's demotion and Rosensweig's departure, also gone are Wenda Harris Millard, who was chief sales officer, and Chief Technology Officer Farzad Nazem. In June, The New York Times reported that, in addition to these executives, at least 17 others at vice president level or higher had left Yahoo since the December reorganization.

In the memo she penned on Wednesday, obtained by IDG News Service, Decker acknowledged that "there have been many changes at Yahoo over the last few months, and I know that change is not always easy."

However, with the latest moves, she feels that the company now has "the right people in the right positions to focus on the right opportunities."

Bolan, who upgraded the stock from "sell" to "hold" Thursday, is optimistic about these latest changes. "It shows that Sue Decker is more in a power position, and it also helps streamline some of the sales organization," he said.

Someone who will not be around much longer is Gregory Coleman, executive vice president of global sales, who, Decker announced, will exit the company in February.

The new sales division, called Global Partner Solutions, will be led by Hilary Schneider and deal with all of the company's partners, including advertisers, agencies, resellers, publishers, ad networks and developers.

"This new group will be charged with creating, delivering and coordinating global best practices for solutions to all of our partners," Decker wrote. "It will also have direct responsibility for our U.S. sales, marketing and business development efforts, including all ad formats, like search, display, video and mobile; all marketing activities; and all customers, including large enterprises and small businesses."

"Global Partner Solutions will be responsible for segmenting the business needs of our partners into actionable groups, understanding the needs of these segments and our ability to meet these needs, developing holistic business strategies to delight and surprise these segments, and executing on these strategies," the memo reads. "This approach will help us achieve faster, smarter decision-making and improved execution in support of better serving our customers."

Bolan doesn't give too much importance to the personnel changes in the sales division. Ultimately, the key figure is Decker, whose name carries more weight than other people's, he said. "The sales division is important but it tends to be automated more than anything else at a place like Yahoo," Bolan said.

Although the current quarter could prove challenging, Bolan is encouraged by positive results and reports from Yahoo's new Panama search advertising platform, which the company is counting on to significantly boost its pay-per-click ad business.

In addition, he likes recent moves to expand technology platforms, such as Yahoo Mail's ability to send text messages to mobile phones. Moreover, although the social-networking service Yahoo 360 hasn't attained a leadership position, the company is doing the right thing by boosting news and video content across its network with sites like the celebrity news-oriented Yahoo OMG, launched in June, and the college sports portal Rivals.com, which Yahoo announced plans to buy in June, Bolan said.

Yahoo didn't immediately return calls seeking comment.

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Juan Carlos Perez

IDG News Service
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