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Yahoo's CEO makes big changes at the top

SAN FRANCISCO — A broad restructuring at Yahoo Inc. on Tuesday will result in the departures of the company's chief operating officer and Lloyd Braun, the former ABC television chief who was hired two years ago to bolster the Internet giant's relationships in Hollywood.

Chief Executive Terry Semel shuffled his management team to make the 12-year-old company more streamlined and nimble. Although Yahoo is still one of the most-visited sites on the Web, its stock has tumbled 30% this year amid worries that it is failing to keep pace with Google Inc. Yahoo is far behind schedule in releasing a search-engine advertising system that investors had been betting would help Yahoo close the gap.

"2006 was a year of great change," said Jordan Rohan, an analyst at RBC Capital Markets. "Yahoo needed to adapt to that change much more quickly than it did."

Speculation about Semel's future has swirled on Wall Street, but the one who is leaving is Chief Operating Officer Dan Rosensweig. Semel said Rosensweig, a five-year Yahoo veteran, declined his request to remain at the company beyond March.

The new rising star is Sue Decker, the chief financial officer, whose promotion Tuesday positions her, analysts say, as the heir apparent to Semel. As head of a new group that caters to advertisers and online publishers, she will oversee Yahoo's biggest moneymaking ventures.

"What we're doing is aligning ourselves with our strategic priorities," Semel said in an interview.

Yahoo said it was searching for an executive to run a second group focused on users. The audience group includes search, communication products, online shopping and media properties.

Farzad Nazem, Yahoo's chief technology officer, will lead a third group that is focused on providing technology for the other two businesses.

Braun stepped down after the reorganization, which greatly curtailed his power. As head of the Santa Monica-based Yahoo Media Group, Braun had reported directly to Rosensweig. His unit is being merged into the audience group.

A seasoned TV veteran, Braun initially struggled to find his footing at the Internet company. He clashed with some Yahoo old-timers, and several of his projects never got off the ground.

Braun earned modest praise more recently for resetting his ambitions and implementing some valuable changes. He worked with "Who Wants to Be a Millionaire" producer Michael Davies to create online shows, redesigned several Yahoo properties and launched new ones focused on food and technology.

Braun said his resignation was not prompted specifically by the restructuring. "I accomplished most of my goals in coming here," he said. "I'm really ready for another challenge, perhaps one that combines old media and new media."

Yahoo has taken several hits in recent months. Analysts have criticized the company for moving too slowly, failing to acquire a fast-growing site, Facebook.com, and delaying the release of its search advertising platform. Yahoo's falling stock price fueled speculation that the company had become a candidate for a merger. Microsoft Corp. and EBay Inc. are considered the most likely suitors.

Criticism flowed from inside the company too. The Wall Street Journal last month published "the Peanut Butter Manifesto," an internal memo that argued Yahoo had spread its resources too thinly.

Its author, Brad Garlinghouse, senior vice president of Yahoo's communications and community products, wrote that Yahoo lacked focus and tried to "do everything and be everything — to everyone." It cited indecisiveness, a lack of accountability on the part of managers and redundant initiatives.

Garlinghouse advocated a radical reorganization and a 15% to 20% cut in head count.

Semel on Tuesday called Garlinghouse "a very good executive" but said the management changes were in the works before his report began circulating.

But he acknowledged many of the memo's points, saying, for example, that it made no sense for the social-media group, search-engine group and Yahoo Media to have their own video initiatives without collaborating. "It was the silo effect," he said.

Greg Sterling, an analyst at Sterling Market Intelligence, said he wondered whether the management changes were simply an effort to change the perception or whether they would have concrete effects. "There's a real sense that Yahoo had fallen from its perch and needs to regain this momentum the company had until recently," he said.

Shares of Yahoo rose 54 cents to $27.43 before Tuesday's announcement.


chris.gaither@latimes.comdawn.chmielewski@latimes.comGaither reported from San Francisco, Chmielewski from Los Angeles.

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