Yahoo CEO Outlines Reorganization Plan to Revive Growth

Yahoo CEO Scott Thompson
Scott Thompson, Yahoo CEO. Photographer: Michael Nagle/Bloomberg

Yahoo! Inc. Chief Executive Officer Scott Thompson, addressing staff today, will outline a restructuring aimed at reversing sales declines and stepping up the pace of product innovation at the largest U.S. Web portal.

Yahoo, after saying last week that it will eliminate 2,000 jobs, is reorganizing businesses around three areas: consumers, geographic regions and technology. The consumer division will focus on media, commerce and so-called connections, which include Web search and e-mail, Thompson said in a memo.

Thompson, CEO since January, embarked on the turnaround to reverse a three-year revenue slump and shore up a stock that has lost 10 percent of its value in 12 months. Yahoo’s failure to keep up with Facebook Inc. and Google Inc. in online advertising led to the ouster of former CEO Carol Bartz and prompted Chairman Roy Bostock and co-founder Jerry Yang to depart. Now the company faces a proxy fight with investor Third Point LLC.

Ross Levinsohn, currently executive vice president in charge of the Americas, will head the media group, which will include the home page, sports, news, entertainment and other media properties, Sunnyvale, California-based Yahoo said.

Shashi Seth, who now runs Yahoo’s Web search products, will oversee connections, which will include search as well as e-mail, the Flickr photo-sharing service, Yahoo’s question-and-answer feature, and other communications and social tools.

Regional Overhaul

The head of Yahoo’s commerce business, which spans jobs, autos and personal ads, is yet to be named.

“Over the last 60 days, we’ve fundamentally rethought every part of our business,” Thompson said last week in a letter to employees that was obtained by Bloomberg News. “We will continue to actively consider all options that allow Yahoo to put maximum effort where we can succeed.”

Yahoo is also revamping how it handles regions. The company will bring together varying functions, such as media and advertising, under a given region, rather than having those tasks handled by different divisions within the same area. Rich Riley, who currently oversees the area that includes Europe, the Middle East and Africa, will be in charge of the Americas, while Asia-Pacific operations will continue to be run by Rose Tsou.

Christophe Parcot will serve as acting head of EMEA while the company seeks a permanent head of that area. He’s currently head of sales for the region.

Mark Morrissey will be in charge of core platforms, which includes Yahoo Labs and user data and analytics, while David Dibble will handle central technology, including Yahoo’s data centers.

‘Eliminating Bureaucracy’

Third Point, which wants investors to elect a slate of directors of its choosing, faulted Yahoo last week for embarking on the job cuts without having articulated a more complete strategy.

Thompson said he delayed the all-hands meeting until after the job cuts -- which affect 14 percent of the workforce -- out of respect for the employees slated to lose their jobs.

“There’s a lot to do and that’s why I can’t stress enough that we all need to focus on getting stuff done,” he said. “Getting stuff done is short hand for eliminating bureaucracy and barriers so we can all innovate as fast as our customers and the industry require. That’s pretty fast.”

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