Yahoo`s Latest Reorganization - Yahoo’s Options and Bright Spots

There are certain bright spots to Yahoo’s situation. Jeff Weiner was considered by many to be loyal to Terry Semel, and not expected to stay around for very long after Semel left. But against all odds, he’s still with the company; the return of units that were taken from him as part of an earlier reorganization might be a vote of confidence. It might even convince him to stick around a little longer, which can only be helpful with so much top talent looking to leave the company.

Yet the company is also receiving some good talent. A Yahoo spokesperson says that “Yahoo continues to attract top talent across all areas of the company, and nearly 90 percent of the job offers we extend are accepted.”

Panama, Yahoo’s new advertising platform, is finally beginning to have an impact. Launched February 5, many advertisers saw the click-through rates for their ads go up. This raised the company’s stock price temporarily, until word came out that quarterly profits were down 11 percent; somewhat appropriately, company shares dropped 11 percent on the news. Wall Street is not patient; as noted recently by Douglas A. McIntyre, writing for 24/7 Wall Street: “The company’s new Panama project, which was built to take market share from Google’s text ad business, has not shown that it can push back the tide of a stagnant topline.” One wants to be optimistic about Yahoo, but many are left wondering how many quarters they must wait.

Still, the most recent reorganization is seen by many as a positive sign. Brian Bolan, an analyst at Jackson Securities, notes that “This is a statement saying ‘We’re going to continue to make these changes as needed as opposed to waiting.’ It’s a positive sign that they’re following through with what they said they will do.”

But will it be enough? At one point, there were rumors that Yahoo had considered improving its monetization of search ads by farming out some of the operation to arch rival Google. And in a recent interview, Microsoft CEO Steve Ballmer was asked if he was in talks to acquire Yahoo. He said “If I were, I wouldn’t say anything, and if I weren’t, I wouldn’t say anything.” That kind of talk, combined with Yahoo’s recently depressed stock price  it is at a three-year low  could make the venerable search engine a very ripe takeover target. One assumes this is the furthest thing from Yang’s mind, but it is almost possible to see the vultures circling. We’ll see if Yang, Decker, and the rest of the team can keep them away a while longer.