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Yahoo fights back against Google

Shake-up follows last month's leaked memo

Yahoo will reorganise into three new units, as part of a shake-up that will see chief operating officer Dan Rosensweig leave the company.

The company said the new groups will help it focus on its most important customer segments: the consumer audience, advertisers and publishers, in an effort to compete more aggressively.

Once an internet and Wall Street darling and consistently one of the internet's top three sites, the company has struggled in the face of a changing landscape, including the rise of social-networking sites and sharp competition from rivals like Google.

The move was not entirely unexpected. Last month, an internal document now known as the "Peanut Butter Memo" called for such a reorganisation. The memo, written by Yahoo senior vice president of communications and communities Brad Garlinghouse, accused the company of involving itself in too many separate activities, spreading itself too thin like a layer of "peanut butter”, and said it should focus instead on key areas. It also recommended up to a 20 percent reduction in headcount, although no cuts were announced in Yahoo's Tuesday statement.

The new units are the Audience Group, the Advertiser & Publisher Group and the Technology Group. Each group's head will report directly to chief executive officer Terry Semel.

The Audience Group will focus on its existing consumer products, such as search, web-based email and news aggregation, while developing social-networking, mobile and handheld content, and international offerings. Yahoo said a search was underway for a group head.

The Advertiser & Publisher Group will handle advertising and relationships with Yahoo partner publishers. It will create a global advertising network both on and off Yahoo sites. The company did not specify how that will happen, although it recently partnered with US newspapers to provide targeted local advertising. Yahoo chief financial officer Susan Decker will oversee this group. Decker will surrender that title and the company will seek a replacement for her, Yahoo said.

Yahoo's new Technology Group will be charged with building and maintaining the infrastructure for these new efforts, and will continue its work on "Project Panama”. The codenamed initiative is believed to be a new advertising system designed to compete with Google's AdWords, with ads served according to search terms entered by users. Chief technology officer Farzad Nazem will head the unit.

The new units and titles will take effect beginning January 1, 2007. Rosensweig will leave at the end of March, Yahoo said. No replacement was immediately named.


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