Yahoo reorganises into three groups, COO to leave

The new groups put focus on the consumer audience, advertisers and publishers

Yahoo will reorganise into three new units, as part of a shake-up that will see chief operating officer Dan Rosensweig leave the company, says Yahoo.

The company says the new groups will help it focus on its most important customer segments: the consumer audience, advertisers, and publishers, in an effort to compete more aggressively.

Once an internet and Wall Street darling and consistently one of the internet's top three sites, the company has struggled in the face of a changing internet landscape, including the rise of social networking sites, and sharp competition from rivals like Google.

The move was not entirely unexpected. Last month, an internal document now known as the "Peanut Butter Memo" called for such a reorganisation. The memo, written by Yahoo senior vice president of Communications and Communities Brad Garlinghouse, accused the company of involving itself in too many separate activities, spreading itself too thin like a layer of "peanut butter," and said it should focus instead on key areas. It also recommended up to a 20% reduction in headcount, although no cuts were announced in Yahoo's statement earlier this week.

The new units are the Audience Group, the Advertiser & Publisher Group, and the Technology Group. Each group's head will report directly to CEO Terry Semel.

The Audience Group will focus on its existing consumer products, such as search, web-based email, and news aggregation, while developing social networking, mobile and handheld content, and international offerings. Yahoo says a search is underway for a group head.

The Advertiser & Publisher Group will handle advertising and relationships with Yahoo partner publishers. It will create a global advertising network both on and off Yahoo sites, but the company did not specify how that will happen, although it recently partnered with US newspapers to provide targeted local advertising. Yahoo CFO Susan Decker will oversee this group. Decker will surrender that title and the company will seek a replacement for her, says Yahoo.

Yahoo's new Technology Group will be charged with building and maintaining the infrastructure for these new efforts, and will continue its work on "Project Panama." The codenamed initiative is believed to be a new advertising system designed to compete with Google's AdWords, with ads served according to search terms entered by users. CTO Farzad Nazem will head the unit.

The new units and titles will take effect beginning January 1, 2007. Rosensweig will leave at the end of March, says Yahoo. No replacement was immediately named.

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