June 20 (Bloomberg) -- Yahoo! Inc. Chief Executive Officer Jerry Yang faces an exodus of top managers, challenging his effort to turn around the Internet company after he spurned a $47.5 billion takeover offer from Microsoft Corp.

At least nine officials may have decided to leave, and the possible reorganization of Yahoo's e-mail, search and homepage units into one global division may prompt even more departures.

Losses amid Yahoo's ranks, including Jeff Weiner from the networks unit and Qi Lu from the search business, may make it harder for the company to prosper on its own. Billionaire investor Carl Icahn is seeking to oust Yang, whom he accused of botching the Microsoft acquisition.

``It's going to cause a cave-in from the top down,'' Colin Gillis, a Canaccord Adams Inc. analyst in New York, said of the lost top engineering talent. He recommends selling the shares.

Yahoo, owner of the second most popular online search engine, said yesterday that Lu, its senior vice president of search technology, will leave Aug. 31. Sunnyvale, California- based Yahoo agreed last week to allow bigger rival Google Inc. to sell advertisements on some of its search results, a partnership Yang reached after scrapping talks with Microsoft.

Yahoo fell 63 cents to $22.10 at 10:37 a.m. New York time in Nasdaq Stock Market trading. Before today, the shares had dropped 13 percent since Yahoo announced talks with Microsoft had ended.

Flickr Co-Founders

Weiner will step down as head of the network division at the end of June, and Senior Vice President Vish Makhijani is becoming the leader of Russian Web search company Yandex's new Silicon Valley office. Stewart Butterfield and Caterina Fake -- co- founders of the Flickr photo-sharing site, which Yahoo bought in 2005 -- also are leaving, the company said this week. Engineer Jeremy Zawodny announced his departure last week on his blog.

Chief Data Officer Usama Fayyad is leaving, the New York Times said last week, citing a person familiar with the move. The TechCrunch blog said yesterday that Senior Vice President Brad Garlinghouse and Joshua Schachter, who founded a Web application company Yahoo bought, are departing as well.

It was Garlinghouse who recommended cutting staff by as much as 20 percent in a memo leaked to the Wall Street Journal in November 2006. The memo, called ``The Peanut Butter Manifesto,'' said too many Yahoo employees had overlapping responsibilities.

Centralize

The Wall Street Journal reported that Yahoo may centralize its e-mail, search and homepage divisions across the globe to improve communication between teams. Hilary Schneider, executive vice president for partner solutions, will probably gain additional responsibilities in the reorganization, the Journal said late yesterday, citing people familiar with the matter.

Details of the plan being formulated by President Susan Decker may be announced as soon as next week, the newspaper said. Yahoo spokeswoman Diana Wong didn't respond to an e-mail last night on the Journal story.

``We have a deep and talented management team across all areas of the company,'' Wong said earlier yesterday about the executive departures. ``Yahoo continues to be a leader in our industry and remains a unique, exciting and important place to work, even as we experience the attrition that's to be expected in the Internet industry.''

Microsoft said last week it offered to buy Yahoo's search engine for $1 billion. The deal would have included an $8 billion investment in the company. The offer followed an earlier bid, rejected by Yahoo, to buy the entire company for $47.5 billion.

To contact the reporter on this story: Crayton Harrison in Dallas at tharrison5@bloomberg.net

Last Updated: June 20, 2008 11:16 EDT