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Yahoo CEO reorganizes company
Thu Feb 26, 2009 8:24pm EST
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By Alexei Oreskovic
SAN FRANCISCO (Reuters) - Yahoo Inc Chief Executive Carol Bartz on Thursday took the wraps off a broad reorganization plan designed to dismantle what she called the "silos" that had slowed down the Internet company.
The move came as Chief Financial Officer Blake Jorgensen became the latest executive to leave Yahoo, which has struggled to convince Wall Street that it has a growth strategy after turning down a takeover bid from Microsoft Corp last year.
Under the plan to simplify Yahoo's management structure, its various technology and product groups will be combined into one entity led by Chief Technology Officer Ari Balogh, according to an email Bartz sent to employees.
Yahoo will also divide the world into just two regions instead of four: North America, led by former U.S. chief Hilary Schneider, and International, whose chief has yet to be named.
"Today I'm rolling out a new management structure that I believe will make Yahoo a lot faster on its feet," Bartz, who took the CEO reins six weeks ago, wrote on Yahoo's corporate blog. "We'll be able to make speedier decisions, the notorious silos are gone, and we have a renewed focus on the customer."
The changes follow weeks of meetings between Bartz and various division heads as she familiarized herself with Yahoo's many businesses.
Unlike Yahoo's previous so-called matrix management structure, which was criticized for lacking clear reporting lines, the new organization centralizes power and control around Bartz.
"It resembles much more of a classic business organization," said Gartner analyst Allen Weiner, adding that a centralized approach helps innovations get to market faster.
Weiner noted that Bartz, who replaced co-founder Jerry Yang in January, is Yahoo's first CEO with the business background that he said is best-suited to implementing such a structure.
Yang's 18-month stint as CEO was defined by his rejection of a $47.5 billion takeover bid from Microsoft, which the software maker subsequently withdrew.
Yahoo's stock price has sunk from a high of $29.73 last May to below $13 on Thursday, as revenue and profits have been pinched by an industrywide slowdown in advertising spending.
TOP CONCERN: SEARCH BUSINESS
Pacific Crest Securities analyst Steve Weinstein said Bartz, the former CEO of software maker Autodesk Inc, has shown herself to be decisive and unafraid to take action in her short time at the company. But he noted that a reorganization alone is not enough to revive Yahoo's fortunes.
"What we really want to see is what direction does Carol want to go. That's the first step," Weinstein said. "And the second step is how well she actually executes."
Among the most pressing questions on investors' minds is the fate of Yahoo's search business, which is a distant second to Google Inc. There has been long-running speculation that the unit could be sold to Microsoft, or Yahoo could team up with another rival such as Time Warner Inc's AOL. Continued...
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