December 6, 2006 2:08 PM PST
A revamped Yahoo turning to users
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Two top Yahoo execs to leave in reorgDecember 5, 2006
The company announced late on Tuesday that it was eschewing its product-aligned structure in favor of one focused on users and on advertising customers and partners. As a result, seven product groups are being merged into one group called Audience, and another seven into a group called Advertisers & Publishers. The Technology Group will provide the infrastructure to support the operational groups.
The reorganization comes as Yahoo struggles to curb losses in market share and revenue to Google. It also comes following a delay of its new advertising platform and a drop in third-quarter profits. The company's stock price has dropped about 30 percent since the beginning of the year.
The Audience Group will "build social media environments" across the Yahoo network and further extend into mobile and IPTV, Chief Executive Terry Semel explained in a company-wide internal e-mail sent on Tuesday. The Technology Group will aim to get "every user on the Yahoo network to participate...through tagging, reviewing, posting photos/video, etc.," he wrote.
Yahoo has a few overlapping products as a result of acquisitions, such as bookmarking site Delicious and photo-sharing site Flickr, that could get combined, analysts said.
"We will see products merged, maybe Delicious and MyWeb or Yahoo Photos and Flickr," said Greg Sterling, principal analyst at Sterling Market Intelligence. "There were probably too many people working on too many products in parallel," he said.
There will be a stronger focus on what the audience is interested in, which could include the integration of more social media features into the existing media products, said Charlene Li, an analyst at Forrester Research.
Yahoo could also integrate its user identities into the different services, like Yahoo e-mail and Yahoo's 360 social networking, Li wrote in a blog. "The new centralized technology group will certainly help rationalize such inconsistencies."
Some Yahoo products that have floundered, like My Yahoo, could even pick up traction as a result of combining technology infrastructures and making it easier for people to use multiple services, said Mike Boland, a senior analyst at The Kelsey Group.
Users can expect to see less original programming, such as the entertainment shows that media unit head Lloyd Braun was hired to create, Boland and the others said. As part of the reorganization, Braun is leaving the company, along with Chief Operating Officer Dan Rosensweig and John Marcom, senior vice president of international operations.
"Entertainment shows are expensive to do," Li said. "They may keep Yahoo Tech and Yahoo Food, but they may enable users to add more content. For instance, I can't even save recipes on there into a recipe box."
Meanwhile, Chief Financial Officer Sue Decker is leaving that post to oversee the revenue-generating advertising group, a move that analysts have interpreted as grooming her for the CEO position.
"This seems to suggest that she is the heir apparent," Sterling said.