Taking Yahoo! forward

When I joined Yahoo! five years ago, I found a company with incredible assets (huge audience, strong brand, healthy balance sheet), great potential, and a team filled with determination and a fighting spirit. But the company faced challenging economic conditions that pummeled the Internet sector and was itself losing money. Yahoo!'s original strategy of "get big fast" (building audience and brand) needed to change. Yahoo! was ready to enter its second phase. We reshaped our sales organization, beefed up our bench, simplified our management operations, and, over the course of several years, executed several transformational initiatives in areas like broadband, search monetization and algorithmic search. Our changes paid off as we later posted quarter after quarter of record growth in audience and revenues.

Yahoo! is now entering what I call its third phase — one focused on customers. We're seeing the competitive and advertising landscapes evolve yet again and today we announced a realignment that we believe will let Yahoo! capture the major growth opportunities ahead. Simply put, we're aligning our business around two key customer groups — our audience and our advertisers and publishers — supported by innovative technology. We're creating three operating groups — Audience, Advertiser & Publisher, and Technology — to increase our strategic focus and accountability, speed decision-making, emphasize scalable platforms and improve resource allocation. Here's the press release.

By having our Audience Group 100% focused on creating great user experiences, we'll also be able to create the greatest amount of value for advertisers, both on and off the Yahoo! network. What does that mean? We intend to expand our global advertising network, creating marketplaces on both Yahoo!'s network as well as across the entire Internet. We've already begun demonstrating our value as an ad network for search affiliates and through announced arrangements with eBay, the newspaper consortium and Vodafone. We'll be able to connect customers with advertisers on valuable properties elsewhere on the web.

As far as our leadership team, I've asked our chief financial officer, Sue Decker, to head our new Advertiser & Publisher Group. She already recently expanded her role to take on our current Marketplaces business unit (which will become part of her new group), tapping into her deep expertise in media, publishing and advertising. An expert on far more than financials, Sue has been a terrific contributor to our business strategy. She's one of the best executives around and the ideal person to fill this critical new role. We're currently recruiting the leader for our Audience Group.

Zod Nazem, our CTO and a key executive team member, will lead our Technology Group. We intend to focus our engineering investments and move towards more integrated product development teams. We've also created a new Platform & Infrastructure sub-group, which will build high-impact, global platforms for everything from advertising to social media.

Missing from this lineup is Chief Operating Officer Dan Rosensweig, who will leave Yahoo! in March… leaving behind a strong legacy. When we recruited Dan five years ago, we brought him on to help revitalize the company. Since then, he's helped grow our global audience to one in every two Internet users, introduce social media to our users, create a leading mobile infrastructure, attract record numbers of advertisers, and position Yahoo! for its next phase of growth. He's been one of the key architects of our new structure and he's leaving Yahoo! with a deep bench of talent that he helped hire — the right people to set us on our course. We're grateful for all of Dan's sleepless nights, missed elementary school soccer games and endless Blackberry exchanges. We couldn't have gotten here without him.

Now, I know what you're thinking — this is all about peanut butter. Actually, we've been orchestrating this plan for a number of months as we envisioned the next phase of growth for the Internet. Following our third quarter results, I very openly discussed that we were going to become more focused and bring about change. But let me stress that we're organizing the company for growth and are continuing to hire great talent.

Change is never easy. We need a revitalized structure to heighten accountability and streamline decision-making while allowing us to better focus on serving our key customers. This one gets us there. I believe Yahoo!'s opportunity is better than it ever has been. We have the largest and most engaged audience in the world. Thirty billion in advertising dollars will come online globally over the next five years. No one is better positioned than we are to take advantage of that. I believe we now have the right strategy, the right structure and the right people to provide the best experiences and results possible to our users, advertisers and publishers.

Terry Semel
Chairman and CEO