(Reuters) – Yahoo Inc Chief Executive Scott Thompson outlined how the Internet pioneer will
revive itself by putting in place a new structure to sharpen its focus on users, advertisers and overlooked areas such as
commerce.
pictured in Santa Monica, California April 18, 2011. Yahoo! will report its quarterly results on Tuesday. REUTERS/Mario
Anzuoni
The company said last week it would lay off 2,000
people or 14 percent of its workforce, and it set in motion a broad restructuring.
Thompson, a former PayPal executive
credited with driving growth at eBay Inc’s payments division, said in an internal memo on Tuesday the company would be
organized along three core divisions beginning May 1. Commerce, an area of Yahoo’s business that will receive new emphasis,
will be critical to future growth, Thompson said.
Once the dominant Internet media and search company, Yahoo has been
eclipsed by Google Inc and Facebook.
“To be very clear, our highest priority is winning in our core business, and that
will earn us the right to pursue new growth opportunities,” Thompson said in his memo.
Thompson, who was named
Yahoo’s CEO in January, will preside over an all-hands staff meeting later on Tuesday.
The company’s three new
divisions will include a consumer arm that will focus on media content under Ross Levinsohn and comprise “connections” like
Flickr, search and email, and e-commerce.
A new “regions” division will deal with advertisers, while a technology
division will handle Yahoo’s infrastructure and platforms.
“You will hear more from our business leaders about their
plans to move each of these groups forward in the coming days and weeks,” Thompson said in the memo.
“Ultimately, only
our customers will decide whether we win or lose in the market.”
As expected, the new structure does away with a
centralized products group that straddled several client types, formerly headed by Blake Irving, who will depart in coming
weeks and is not expected to be replaced.
FROM MEDIA TO COMMERCE
Yahoo releases first-quarter results on April
17. On Tuesday, its shares were down 1.1 percent at $14.93 in early afternoon trade.
“Right now they’re just trying
to put all the pieces in place and trying to figure out some kind of coordinated way to move forward. It’s pretty obvious
the new leadership thinks they need to be leaner,” said Michael Yoshikami, fund manager for Destination Wealth
Management.
“All the reorg is really secondary to really figuring out what Yahoo wants to be.”
Thompson’s
Tuesday memo also mentioned expanding beyond “traditional” e-commerce.
Yahoo will soon name an executive to head up a
new team to wring more advertising revenue from existing businesses covering automobiles, shopping, travel, jobs, personals
and real estate.
In media — a key area for Thompson’s predecessors — the CEO plans to highlight Yahoo’s customary
news, finance, sports and entertainment pages,
and work closely with content producers and editors on breaking news as well as pivotal events such as this year’s Olympic
Games and the coming U.S. elections.
The layoffs and internal overhaul come as Yahoo’s revenue falls under
competition from Google and Facebook. Last year, Yahoo’s revenue totaled $4.98 billion, compared with Facebook’s $3.71
billion, a number achieved with just 3,200 employees.
Yahoo is also fighting a battle with hedge fund manager Daniel
Loeb, whose Third Point is the company’s largest institutional shareholder with a 5.8 percent stake. Loeb is seeking to
appoint four new board directors.
“It’s time for Yahoo to move forward, and fast,” Thompson said in his
memo.
(Writing by Edwin
Chan; Editing by John Wallace and Steve Orlofsky)
