3 more Yahoo execs reportedly jumping ship

June 20, 2008 5:55:13 AM PDT
Yahoo Inc.'s management ranks are rapidly thinning as the Internet pioneer fends off a shareholder mutiny threatening to culminate in the firing of Chief Executive Jerry Yang.

Three more executives have decided to jump ship, according to reports published Thursday by two blogs ? AllThingsD and Techcrunch ? and The New York Times. The reports were based on unnamed people with knowledge of the departures.

The latest defectors reportedly are: Qi Lu, an executive vice president in charge of Yahoo's search and advertising technology; Brad Garlinghouse, a senior vice president who oversees communications tools like mail; and Vish Makhijani, a senior vice president involved in search.

Garlinghouse is the best known of the trio. In 2006, he wrote a scathing memo arguing that Yahoo had gone awry and needed a major housecleaning. The so-called "manifesto" caused a stir when it was leaked to The Wall Street Journal.

The management turmoil appears related to a major reorganization that Yahoo President Susan Decker wants to complete as early as next week, according to a Wall Street Journal story that cited unnamed people familiar with the matter.

Hilary Schneider, a Yahoo executive vice president who is one of Decker's most trusted subordinates, could wind up with expanded responsibility in a streamlining aimed at improving communication between the company's product groups and overseas sales division, the Journal reported.

Yahoo declined to confirm the departures Thursday but issued a statement expressing its confidence in "a deep and talented management team."

"Yahoo continues to be a leader in our industry and remains a unique, exciting, and important place to work even as we experience the attrition that's to be expected in the Internet industry," the company said.

The Sunnyvale-based company already lost four prominent leaders in the past week: two executive vice presidents, Jeff Weiner and Usama Fayyad; and the creators of Yahoo's Flickr photo sharing service, Stewart Butterfield and Caterina Fake.

The exodus could worsen Yahoo's instability as Yang and his remaining lieutenants scramble to regain their bearings after spending five months grappling with an unwelcome takeover bid from Microsoft Corp.

Hoping to overcome Yahoo's resistance, Microsoft raised its original offer from $44.6 billion to $47.5 billion, or $33 per share. The software maker withdrew the bid May 3 when Yang sought $37 per share ? a price that Yahoo's drooping stock hasn't seen since January 2006.

Yahoo shares fell 18 cents Thursday to close at $22.73.

Spurred on by shareholders upset with Yahoo's handling of the Microsoft negotiations, activist investor Carl Icahn is campaigning to oust the company's board in an Aug. 1 election.

If he gains control of Yahoo's nine-member board, Icahn has pledged to fire Yang, who co-founded the company in 1995 and became CEO a year ago.

Yang has argued Yahoo is on the verge of a turnaround that will boost its net revenue by at least 25 percent in 2009 and 2010.

Those projections have been greeted with widespread skepticism among investors burned by Yahoo's broken promises in the past.

Yahoo tried to extend an olive branch to its shareholders last week by striking an online advertising deal with Internet search leader Google Inc. Yahoo is counting on the alliance to boost its annual revenue by about $800 million.

But the Google deal won't kick in until late September at the earliest to give U.S. regulators and lawmakers more time to determine whether the partnership would violate antitrust laws. Combined, Google and Yahoo control more than 80 percent of the U.S. search advertising market.

Yahoo choose the Google partnership over another offer from Microsoft. After backing off its attempt to buy the entire company, Microsoft proposed spending $9 billion to acquire Yahoo's search business and a roughly 16 percent stake in Yahoo's remaining operations.