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March 24, 2007, 7:30 pm
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Yahoo! reorgs! -- loses execs (and tubby-ATM)
Thu, 12/07/2006 - 5:27am
You're fired! It's IT Blogwatch, in which Yahoo! does a major, major
reorganization. Not to mention the last thing you want to see on a ATM
Steven Schwankert has the schcoop:
Yahoo Inc. will reorganize into three new units, as part of a shake-up
that will see Chief Operating Officer Dan Rosensweig leave the
company, Yahoo said Tuesday. The company said the new groups will help
it focus on its most important customer segments -- the consumer
audience, advertisers, and publishers -- in an effort to compete more
Once an Internet and Wall Street darling and consistently one of the
Internet's top three sites, the company has struggled in the face of a
changing Internet landscape, including the rise of social networking
sites and sharp competition from rivals like Google Inc.
The move was not entirely unexpected. Last month, an internal document
now known as the "Peanut Butter Memo" called for such a
reorganization. The memo, written by Yahoo's senior vice president of
communications and communities, Brad Garlinghouse, accused the company
of involving itself in too many separate activities, spreading itself
too thin like a layer of peanut butter, and said it should focus
instead on key areas.
John Paczkowski decodes:
Of course part of putting people in the right places to execute a new
strategy is removing those who couldn't execute the old one. So in the
coming months Chief Operating Officer Dan Rosensweig and Yahoo Media
Group chief Lloyd Braun will leave the company. Remarkably Terry "I'm
just along for the ride" Semel, who's fallen out of favor with Wall
Street and perhaps even his own troops, will stay, although as many in
the valley will tell you, he really shouldn't. Declining profits, a
delayed ad platform and search market share losses make a three-legged
stool suitable for kicking out from under a condemned man.
Om Malik chuckles:
If you have walked the streets of Manhattan, you have seen an all
familiar scene: a street hustler playing three card monte, with a
gaggle of unsuspecting tourists around him, betting that they can
outwit and out-hustle him. They often lose, and go home disappointed.
It is the same kind of feeling you get when you read Yahoo's latest
press release ... a collection of flowery words, which runs about
1,500 words doesn't really paint a clear picture, and makes you wonder
if anything will really change.
Yahoo says its business will now be divided into two groups: the
audience group and the advertiser & publisher group, and each group
will have two executives and a technologist attached to them. In other
words, there will be one group that creates advertising opportunities
aka inventory while the other brings in the revenue.
Terry Semel, Yahoo! Chairman and CEO:
Yahoo! is now entering what I call its third phase -- one focused on
customers. We're seeing the competitive and advertising landscapes
evolve yet again ... By having our Audience Group 100% focused on
creating great user experiences, we'll also be able to create the
greatest amount of value for advertisers, both on and off the Yahoo!
network ... We intend to expand our global advertising network,
creating marketplaces on both Yahoo!'s network as well as across the
entire Internet ... We intend to focus our engineering investments and
move towards more integrated product development teams.
Now, I know what you're thinking - this is all about peanut butter.
Actually, we've been orchestrating this plan for a number of months as
we envisioned the next phase of growth for the Internet. Following our
third quarter results, I very openly discussed that we were going to
become more focused and bring about change. But let me stress that
we're organizing the company for growth and are continuing to hire
Is Yahoo just reshuffling the deck chairs, or is it really trying to
redefine itself? Ask some Yahoo employees what the company's mission
is and they draw a blank, even now. For a long time, the debate was
whether Yahoo was trying to be a media company or a technology
company. But that distinction is meaningless now. All media companies,
by definition, need to be technology companies or risk being left by
the wayside. Yahoo, more than any other company, can become the place
where you use technology to organize all of your media ... Yahoo needs
to find what it does best and stick to it. Otherwise, it won't
continue to be the most popular place on Web for long.
Baris Karadogan asks:
How come they could not name a person to run the Audience group when
they have this many Vice Presidents? My knee-jerk reaction is that it
will be almost impossible to find a person to parachute in and make an
impact in the time that matters. Yahoo is a big and slow moving
company. If this person is not in the ranks, then a massive clean up
[Terry] Semel has been an absentee CEO; he still lives in LA with his
family, reportedly napping at the Four Seasons in SF when he's too
tired to fly his jet back to LA during the week. This aloofness and
distance, along with the presumption that he's been slowly moving all
the "important" parts of Yahoo (read: the Hollywood ass-kissing parts)
to Santa Monica, are among the morale issues that can be fairly laid
at his feet.
Henry Blodget doesn't quite agree:
I should also say that I'm impressed with how Terry handled the whole
Peanut Butter Manifesto thing. No word yet on where Brad Garlinghouse
will sit in the newly reorganized Yahoo, but Terry's calm refusal to
address the memo publicly, combined with rapid actions that
acknowledged much of what it said, strike me as supremely professional.