December 5, 2006 6:50 PM PST

Two top Yahoo execs to leave in reorg

Yahoo's chief operating officer and the head of its entertainment group are leaving as part of a major reorganization announced late on Tuesday.

Chief Operating Officer Dan Rosensweig and Lloyd Braun, the head of Yahoo's media and entertainment group, are leaving the company, Yahoo spokeswoman Joanna Stevens said. John Marcom, senior vice president of international operations, is also leaving the company "soon," she said. She declined to provide more details.

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 leadership assignments will take effect on January 1, 2007, and the reorganization is expected to be completed by the end of March. Stevens said no layoffs were being announced at this time.

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

Terry Semel Terry Semel

"We need a revitalized structure to heighten accountability and streamline decision making while allowing us to better focus on serving our key customers," Semel said 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 lead the 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, the company said in a statement late Tuesday.

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

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

"Sue 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 Banc of America Securities. "She really gets it."

Susan Decker Susan Decker

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 added, 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 rapid pace, and we're reshaping Yahoo to be a leader in this transformation, just as we did successfully five years ago," Semel said in a statement.

Dan Rosensweig Dan Rosensweig

Rosensweig, who joined Yahoo nearly five years ago, was previously president of CNET 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 infrstructure, 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.

"We had heard for a while that he wanted to leave and do something new, like maybe get into politics," Pitz said. "But I think he wanted to stay until March to ensure a smooth transition for the second phase of Panama, which is expected in the first quarter."

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 followers 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. "We think Panama's new marketplace will create some unanticipated consequences. Execution risk increases meaningfully when a new leader is forced to deal with unintended consequences in addition to learning his (or) her new role."

Over the long term, Noto believes that the reorganization will aid Yahoo in its next stage.

CONTINUED: The Peanut Butter Manifesto…
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