Yahoo CEO reorganizes company

CIOL Bureau
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SAN FRANCISCO, US: Yahoo Inc Chief Executive Carol Bartz on Thursday took the wraps off a broad reorganization plan designed to dismantle what she called the "silos" that had slowed down the Internet company.


The move came as chief financial officer Blake Jorgensen became the latest executive to leave Yahoo, which has struggled to convince Wall Street that it has a growth strategy after turning down a takeover bid from Microsoft Corp last year.

Under the plan to simplify Yahoo's management structure, its various technology and product groups will be combined into one entity led by chief technology officer Ari Balogh, according to an email Bartz sent to employees.

Yahoo will also divide the world into just two regions instead of four: North America, led by former U.S. chief Hilary Schneider, and International, whose chief has yet to be named.


"Today I'm rolling out a new management structure that I believe will make Yahoo a lot faster on its feet," Bartz, who took the CEO reins six weeks ago, wrote on Yahoo's corporate blog. "We'll be able to make speedier decisions, the notorious silos are gone, and we have a renewed focus on the customer."

The changes follow weeks of meetings between Bartz and various division heads as she familiarized herself with Yahoo's many businesses.

Unlike Yahoo's previous so-called matrix management structure, which was criticized for lacking clear reporting lines, the new organization centralizes power and control around Bartz.


"It resembles much more of a classic business organization," said Gartner analyst Allen Weiner, adding that a centralized approach helps innovations get to market faster.

Weiner noted that Bartz, who replaced co-founder Jerry Yang in January, is Yahoo's first CEO with the business background that he said is best-suited to implementing such a structure.

Yang's 18-month stint as CEO was defined by his rejection of a $47.5 billion takeover bid from Microsoft, which the software maker subsequently withdrew.


Yahoo's stock price has sunk from a high of $29.73 last May to below $13 on Thursday, as revenue and profits have been pinched by an industrywide slowdown in advertising spending.

Top concern: Search business

Pacific Crest Securities analyst Steve Weinstein said Bartz, the former CEO of software maker Autodesk Inc, has shown herself to be decisive and unafraid to take action in her short time at the company. But he noted that a reorganization alone is not enough to revive Yahoo's fortunes.


"What we really want to see is what direction does Carol want to go. That's the first step," Weinstein said. "And the second step is how well she actually executes."

Among the most pressing questions on investors' minds is the fate of Yahoo's search business, which is a distant second to Google Inc. There has been long-running speculation that the unit could be sold to Microsoft, or Yahoo could team up with another rival such as Time Warner Inc's AOL.

Yahoo tried to form a Web search partnership with Google last year as an alternative to a deal with Microsoft, but the deal collapsed under U.S. antitrust review.


On Wednesday, Jorgensen said Yahoo was not opposed to a search sale or partnership, leading some observers to believe it was moving closer to a deal with Microsoft.

Earlier this week, Microsoft CEO Steve Ballmer said he wants to team up with Yahoo to compete with Google, which controls 63 percent of the U.S. search market.

Yahoo shares rose as high much as 7.3 percent to $13.39 on Thursday on Jorgensen's comments. They finished the regular trading session up 4 percent at $12.98 on Nasdaq.


"It's premature to discuss our strategic options," said a Q&A document distributed by Yahoo management to employees on the restructuring. "For the time being, nothing is off the table and creating shareholder value is our first priority." Yahoo said the changes were not driven by a desire to cut costs, but it is always reviewing its business and expenses.

Searching for CFO

Yahoo has initiated a search for a new CFO, and Jorgensen will remain through a transition period, Yahoo said in a filing with the U.S. Securities and Exchange Commission on Thursday.

Bartz also said in the memo that Marco Boerries, head of the Connected Life group, which focused on bringing Yahoo products to mobile devices, has resigned for personal reasons.

She said Yahoo's business and advertising efforts for mobile will be led by David Ko, while Elisa Steele, formerly at NetApp Inc, will be chief marketing officer.

In October, Yahoo announced plans to cut at least 10 percent of its workforce of roughly 15,000 employees. It posted a fourth-quarter net loss of $303 million, while sales fell 1 percent from a year earlier to $1.8 billion.

In her note to staff, Bartz acknowledged "reorg fatigue" within the ranks, after multiple restructurings that occurred before she joined. "Hang in there -- our intention is to leave this structure in place for two to four years," she wrote.

Bartz also unveiled a new "customer advocacy group" to better attune the company to the outside world. "After getting a lot of angry calls at my office from frustrated customers," she wrote on Yahoo's blog, "I realized we could do a better job of listening to and supporting you."