Yahoo Shares Down The Day After Reorg
By: David Utter
A 57-cent drop to 26.86 proved the response investors had to Yahoo's reorganization announcement twenty-four hours later.
If the shakeup announced by Yahoo (YHOO) CEO Terry Semel late Tuesday was meant to inspire investors, it didn't have the desired effect.
Trading volume of 35 million ran about 7 million over Yahoo's three-month average volume. That may indicate too much uncertainty about Yahoo's future, specifically the ability of its new contextual advertising system to compete with Google's vaunted technology.
In the announced reorganization, Yahoo will divide into three internal groups: Audience, Technology, and Advertising & Publisher. The latter group has Susan Decker, Yahoo's CFO, promoted to head its operations.
A search for a new CFO is under way to fill Decker's former role. Her new stint will involve bringing the company's marketing and sales efforts together with distribution partner relations. It is thought that the position could be a test; pass it, and Decker may replace Semel as CEO, some have suggested.
In some ways, the woes confronting Yahoo now parallel those faced by Microsoft, which initiated a significant restructuring in September 2005. Like Yahoo, Microsoft reorganized into three divisions, and announced Windows development executive Jim Allchin would retire at the end of 2006.
Yahoo's woes parallel those experienced by Microsoft, with reports of duplicated efforts and ineffective management from executives like Semel and ousted media &entertainment; head Lloyd Braun hampering Yahoo's ability to compete and close on big deals.
Microsoft may have a role to play in Yahoo's future. A persistent rumor holds that Microsoft could purchase Yahoo, a move that would be welcomed by big investors impressed by Microsoft's massive market cap and cash reserves. That would leave Microsoft in the position of making the cuts Yahoo needs to be a more profitable Internet competitor.
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