Will Yahoo's Reorganization Be Enough?Will Yahoo's Reorganization Be Enough?

a well-regarded executive whose responsibilities were recently expanded to include autos, classifieds, HotJobs, shopping, travel and other Yahoo products. She will now head the advertiser and publisher group."

Ms. Decker joined Yahoo in 2000 from Donaldson, Lufkin & Jenrette, where she served as global director of equity research and before that, a newspaper company analyst. Ms. Decker, known for her tight hold on Yahoo's purse strings, is seen as a possible candidate to succeed Mr. Semel, a path unobstructed now that [COO Daniel] Rosensweig is leaving the company....

Despite its position as the leading Internet destination, Yahoo has suffered many setbacks in recent months, including the delay of a major overhaul of its advertising system. Its problems include the growing lead that Google enjoys in searches and advertising, and an inability to compete effectively in social networking media, where companies like MySpace and YouTube have been acquired by rivals. There have been increasing reports of departures, low morale and internal complaints of a growing bureaucracy.

Mr. Semel said that when he joined the company five years ago, he focused on increasing the breadth of Yahoo products. Now, he said, the company is beginning a transformation to make itself "more customer-centric, not more product-centric."...

"In a nutshell, Yahoo has fallen victim to its own success," Safa Rashtchy, a Piper Jaffray analyst, said Tuesday before the reorganization was announced. Yahoo was able to notably expand its audience after the Internet bubble burst, Mr. Rashtchy said. "That success made it lose sight of the fact that the world has changed. 2006 is a world in which MySpace is about to take over Yahoo in audience, and social networks are becoming popular with advertisers, not just users, and Yahoo has been left behind in that trend."

The question everyone is going to have is whether these changes go far enough. In the past year the company has gotten its clock cleaned by Google in the search related advertising business and seems poised to have its branded advertising business threatened by Google's purchase of You Tube. Will these changes shake things up enough so that Yahoo can begin to win back the business it has lost?

I don't know myself, but I can tell you this: A half dozen former execs I have talked to in the past few days don't think so. They say that Yahoo's problems run deeper than anything a reorg can fix. They say that Yahoo is an organization that still doesn't know what it wants to be or stand for. Is it a media company or a technology company? Is it a portal or a social network? Is it more interested in hits or in the power of user generated content on the long tail? And is it willing to spend the money necessary to compete with the likes of Google and Microsoft who have committed to spending billions on server farms and high priced engineering talent?

Their solution? Terry Semel needs to resign and Yahoo needs to appoint a seasoned, dynamic technology executive to lead it.