Yahoo said on Tuesday that it was restructuring its operations and shuffling its management ranks amid growing criticism in and outside the company that it had become too bureaucratic to compete effectively against nimbler rivals.
The moves include the departure of Daniel Rosensweig, the chief operating officer since April 2003, and the resignation of Lloyd Braun, the former ABC executive who has run Yahoo's media group.
Under the plan, Yahoo will reorganize itself into three units, including one focused on its audience and one on its advertisers and publishers. A third unit, focused on technology, will develop products serving the entire organization.
"There is no question, our new structure will increase accountability, will reduce bottlenecks and speed decision-making," Terry Semel, Yahoo's chairman and chief executive, said in an interview.
The reorganization appears to signal the ascendancy of Susan Decker, the chief financial officer, a well-regarded executive whose responsibilities were recently expanded to include classifieds, autos, HotJobs, shopping, travel and other Yahoo products. She will now head the advertiser and publisher group.
Decker joined Yahoo in 2000 from Donaldson, Lufkin & Jenrette, where she served as global director of equity research and before that, a newspaper company analyst. Decker, known for her tight hold on Yahoo's purse strings, is seen as a possible candidate to replace Semel, a path unobstructed now that Rosensweig is leaving the company.
Rosensweig will depart at the end of March when the company expects the reorganization to be complete. Currently, a number of operating and other units report to Rosensweig.
Among them is the media group led by Braun, who joined Yahoo two years ago with ambitious plans to develop original programming for the Internet from a base in Santa Monica, California. He scaled back his plans after run-ins with Yahoo's management, especially Decker, over budgets.
Despite its position as the leading Internet destination, Yahoo has suffered many setbacks in recent months, including the delay of a major overhaul of its advertising system.
Its problems also include the growing lead that Google enjoys in searches and advertising, and an inability to compete effectively in social networking media, where companies like MySpace and YouTube have been acquired by rivals. There have been increasing reports of departures, low morale and internal complaints of a growing bureaucracy.
Semel said that when he joined the company five years ago, he focused on increasing the breadth of Yahoo products. Now, he said, the company is beginning a transformation to make itself "more customer-centric, not more product-centric."
"Yahoo has always been a very product-specific firm," Semel said. "Many different groups in the company were building new product innovations and features for whatever group they were working for." The company will now have the ability to put its engineering resources into technology platforms that could be used across the entire Yahoo network, he added.
Farzad Nazem, the chief technical officer, will head a new technology group, and Yahoo said it would run an external search for an executive to lead its audience group, as well as for a new chief financial officer.
It is not entirely clear what the changes will mean for Yahoo's sprawling network of products or whether they will satisfy demands from stakeholders for a major overhaul.
"In a nutshell, Yahoo has fallen victim to its own success," Safa Rashtchy, a Piper Jaffray analyst, said on Tuesday before the reorganization was announced.
Yahoo was able to notably expand its audience after the Internet bubble burst, Rashtchy said.
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