Yahoo's Executive Brain Drain Continues

Three more executives are about to leave Yahoo, according to TechCrunch. They are Qi Lu, executive vice president at Yahoo’s Search and Advertising Technology Group, whose departure has been rumored for awhile and reported earlier today by Boomtown; Brad Garlinghouse, senior vice president of Communications and Communities and author of the famous “Peanut Butter Manifesto” in late 2006 that criticized Yahoo for a lack of focus; and Vish Makhijani, senior vice president and general manager of Yahoo Search, who is leaving to become CEO of Russian Internet portal and search engine Yandex’s new Bay Area skunkworks, Yandex Labs (*not* the company overall, I hear from an investor. Press release is here.).

Their departures, related in part to an extensive reorganization to be announced as early as next week, according to the Journal, follow those of EVP Jeff Weiner, Chief Data Officer Usama Fayyad, prominent Yahoo software developer Jeremy Zawodny (who said today he’s heading to Craigslist), and Flickr cofounders Stewart Butterfield and Caterina Fake. (Update: And founder Joshua Schachter, according to TechCrunch, which has an apparent comment from him that doesn’t exactly exude confidence in Yahoo management: “I was largely sidelined by the decisions of my management. … It was an incredibly frustrating experience….”)

Clearly, this many high-level and high-profile departures in such a short period looks really bad. Departures this high up, many of them well-respected people, can’t help Yahoo’s efforts to show it can carve out its own path to a better future. Yahoo’s stock today is falling further below $23 a share, a full $10 a share below Microsoft’s last offer for the whole company.

At the same time, it’s worth asking whether Yahoo ultimately might be better off with new blood. Some people I’ve talked to note that the folks leaving are part of a team that, for whatever reason, failed to get Yahoo back into broad contention with Google. Cofounder and CEO Jerry Yang clearly hasn’t fostered confidence among much of anyone, but I don’t join the vicious pack of pundits who pile every Yahoo misstep upon him. Companies this big just don’t work that way, unless maybe they’re named Apple.

Still, it’s an open question whether Yahoo can get a tranfusion at all. It’s hard to see why on earth any really good executive would join Yahoo now, in the midst of a crisis whose solution isn’t readily apparent, and at a time when Yahoo’s tanking stock price and continuing proxy battle by Carl Icahn open it up to potential acquirers once again.

Not least, no job candidate can be sure who’s going to be running things. A lot of folks are betting that Yang can’t last long in the top spot, given the evident lack of confidence in his leadership from his executive team and from shareholders. (UPDATE: The skeptics may be getting ahead of themselves. A person close to the situation says Yang isn’t going anywhere, at least not anytime soon. Of course, if the criticisms keep rising, at some point they may force a change, but it appears not for now.)

Even most turnaround execs aren’t going to take a flyer in this kind of situation. And it seems doubtful that either President Sue Decker, who has been joined to Yang’s hip recently, or Hilary Schneider, the executive vice president for global partner solutions who’s rumored to be in line to take over more operations, will inspire enough confidence in shareholders or even Yahoo’s own staff.

Most people thought Microsoft eventually would win Yahoo—all of it, not just its search unit, which was never a real option from Yahoo’s point of view. After all, the strategic imperative for Microsoft to buy Yahoo hasn’t changed a bit. Quite the contrary, it’s now more than four months further behind a still-surging Google.

More recently, it has looked like Microsoft really wasn’t interested. But if things keep going the way they’re going for Yahoo and its stock price drifts even lower, I can’t help thinking that at some point, that still-profitable audience of half-a-billion people worldwide on Yahoo looks like a bargain again to somebody. Indeed, it’s quite possible Microsoft, more than any other buyer, may be glad to see Yahoo’s executive ranks cleared to make way for its own growing cadre of advertising execs. But it seems Microsoft hasn’t relayed any new intentions to Yahoo, so nothing appears imminent.