Yahoo gets massive management shake-up
Friday 27 February 2009
After spending six weeks diagnosing Yahoo Inc.'s troubles, new Chief Executive Carol Bartz started to prescribe a cure Thursday with a management shake-up that will usher out the internet company's chief financial officer.
Besides pushing CFO Blake Jorgensen out the door, the overhaul will expand the responsibilities of Yahoo's chief technology officer, Ari Balogh, and the company's top advertising executive in the United States, Hilary Schneider.
Bartz also created two jobs: a chief marketing officer and her own chief of staff.
Elisa Steele, who has been working at NetApp, will join Yahoo as chief marketing officer on 23 March, while Joel Jones, a former McKinsey consultant who has been Yahoo's corporate strategist, becomes Bartz's chief of staff. The changes were effective immediately.
With the new pecking order, Bartz hopes to speed up Yahoo's decision-making and have a senior team that supports her strategy for turning around a company struggling with three years of declining profits - a downturn that had battered its stock price well before the market's overall decline.
Although Bartz still hasn't specified how she intends to get Yahoo back on track, she has left no doubt about her resolve to recapture the internet pioneer's glory days.
"I'm singularly focused on providing you with awesome products. Period," Bartz wrote in a blog posting addressed to Yahoo's 500 million worldwide users.
Yahoo's previous two CEOs, co-founder Jerry Yang and former movie studio mogul Terry Semel, also attempted to revive Yahoo in recent years by reshuffling executives, but those moves never paid off. Bartz's reorganisation is meant to last two to four years.
Investors appear to be betting that Bartz will deliver on her promises. Yahoo shares gained 50 cents, or 4 per cent, to close Thursday at $12.98.
Yahoo hired Bartz, 60, last month to replace Yang, who exasperated many investors and employees with his wishy-washy management style. Yang also infuriated stockholders last year by turning down an opportunity to sell Yahoo to rival Microsoft for $47.5 billion, or $33 per share, well above the price of $19.18 just before the software maker announced its initial bid.
Although Microsoft CEO Steve Ballmer has repeatedly said he no longer wants to buy Yahoo in its entirety, he has indicated he still wants to explore a possible partnership that would involve Yahoo's online search engine, the second most popular behind that of Google Inc.
Bartz so far has been lukewarm to the idea in her public remarks, but Jorgensen expressed an interest in working with Microsoft in a Wednesday presentation at an investor conference.
In a Thursday research note, Barclays Capital analyst Douglas Anmuth said he didn't consider Jorgensen's departure a sign Yahoo is any less interested in working with Microsoft.
But Anmuth wondered about the wisdom of letting Jorgensen go, given that Bartz came to Yahoo without any previous internet experience. Jorgensen also was somewhat of a novice, having joined Yahoo in June 2007, but Anmuth thought he would at least provide Yahoo some stability.
Jorgensen will remain CFO until Bartz can find replacement. His departure isn't a total shock because he was an ally of former Yahoo President Susan Decker, who resigned last month after Bartz beat her out for the CEO job.
But Jorgensen provided no inkling he might be headed out the door when he met with USB analyst Benjamin Schachter earlier this week, Schachter wrote in a Thursday note.
"While we were fans of Blake, Bartz is clearly going to be leading the charge here," Schachter wrote.
Bartz mainly wants to root out bureaucracy with her new chain of command.
"People here have impressed the hell out of me," Bartz wrote on Thursday. "They're smart, dedicated, passionate, driven, and really nice. There's so much great energy and frankly lots of optimism. But there's also plenty that has bogged this company down. For starters, you'd be amazed at how complicated some things are here."
In hopes of simplifying things, Bartz is placing all of Yahoo's products under Balogh, who joined the company a year ago. The shift appears to lessen the authority of Ash Patel, who had been overseeing most of Yahoo's products.
Schneider's job is being expanded to include oversight of advertisers and partners in Canada and Mexico, not just the United States. Bartz intends to hire another executive to steer Yahoo's advertising relationships overseas.
Finally, Yahoo is creating a new division to handle complaints from frustrated users and advertising customers.
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