Yahoo!'s Brain Drain Hurts Chances for a Turnaround

Despite the controversial severance plan Yahoo! Inc. (YHOO) adopted in response to Microsoft Corp.'s (MSFT) February bid, the Internet company continues to lose high-level staffers. The latest are Vish Makhijani, senior vice president and general manager of search, Brad Garlinghouse, senior vice president of Communications and Communities, and Qi Lu, executive vice president engineering for Search and Technology.

They join the co-founders of Flickr, Caterina Fake and Stewart Butterfield, who were brought into the fold when Yahoo! acquired the online photo sharing site in 2005. 

While the exodus is worrisome since it evokes employees fleeing a sinking ship, there's little question Yahoo!'s middle management structure was bloated, so a little thinning out is probably a good thing.

But it also shows how the ongoing uncertainty around Yahoo! is driving away the kind of talent the company needs to turn itself around and as it reorganizes. To that end, CEO Jerry Yang went cross-country to talk lawmakers about its search advertising deal with Google Inc. (GOOG). Getting antitrust approval on the deal is no slam dunk, especially with Microsoft expected to raise a stink. If the partnership doesn't fly with regulators, it will give unhappy Yahoo! shareholders one more reason to call for Yang's head.

One of those unhappy investors, Mark Nelson of Mithras Capital, is asking Microsoft to take a proposal it made to acquire Yahoo!'s search business directly to shareholders. The software maker reportedly offered to acquire a 16% stake in Yahoo! and its search business for $9 billion. Mithras, which owns 1.7 million shares, or a tiny fraction of its 1.38 billion shares outstanding, has previously said that it will support Carl Icahn's slate in a proxy fight for control of Yahoo!'s board of directors. His request seems likely to fall on deaf ears in Redmond, Wash.

Comments

[yankini:]

What makes you think that the departures were actually forced? Are you working at yahoo?

2008 Jun 20 09:13 AM

[yankini:]

Yahoo is having a major reorg and useless people are let go. Of course, there will be some good people leaving in the process because their own ambitions of becoming CEO/CTO were turned off. The main thing is such job insecurity will make people accountable at last.

2008 Jun 20 09:15 AM

[tyneham:]

And to make it worse, Internet click fraud is underestimated by web-traffic auditors. The fraud is deceptively downplayed by major financial beneficiaries and their small time accomplices or affiliates. Big or not, no online advertiser is immune from growing the fraud. There is mounting unease and concerns over the fraud on all websites that have affiliate programs. These serious, legal issues are not being addressed by the law makers in most countries.

By some logical estimates, click fraud could be over sixty percent. However, even one percent of $90 billion of global 2008-2009 Internet ad spend is too high, mainly because advertisers, big or small, are still deceived, overcharged by millions and thus defrauded every day.

Read how, for example, "Yahoo protects online fraudsters, locks out legal ethical experts," web links here tyneham.wordpress.com , del.icio.us/tyneham?se... where some cases are cited, www.networkworld.com/c... , tyneham.blogspot.com , tyneham.newsvine.com

2008 Jun 26 09:00 PM