Change is Good... But Lots More is Needed

Implications: Reshuffling the executives at Yahoo is indicative of the company and its board, recognizing that Yahoo is falling behind Google and the Nasdaq. Positioning Sue Decker with operations and revenue responsibilities will make for a more logical successor to Terry Semel. Yahoo still lacks the strategic direction, growth and revenue diversification to surpass Google.   


Analysis: Looking at the trailing 12 month performance of Yahoo, Google and the Nasdaq (http://finance.yahoo.com/q/bc?t=1y&s=YHOO&l=on&z=m&q=l&c=goog&c=%5EIXIC)
indicates that Yahoo has lagged its competitors and the industry significantly. Change at Yahoo is long overdue. Few understand this better than Sue Decker, Yahoo's CFO. Her background as a financial analyst has and will serve her well in her newly appointed role, now heading up a division for advertising and publishing, the largest revenue contributor for the company. Placing Ms. Decker in this position exposes her to a revenue producing arena with direct P&L responsibility, a new shift in her career development, but a logical and necessary step if she is to be considered a successor to Terry Semel as CEO. 

While this is a great move for Ms. Decker, the Peter Principle of management theory is no more evident than with this shift. Placing an inexperienced executive such as Ms. Decker in the most critical area at Yahoo without any previous online media, advertising or technology operations experience will prove (i) her level of incompetence as an operator and (ii) further contribute to the competitive variance between Yahoo, Google, MSN, Ask and other industry benchmarks.  Moving a talented player into your most troubled position might work for some companies, but moving Ms. Decker into Yahoo's most critical and needed revenue contribution unit will prove detrimental.

Yahoo needs not just a reshuffling of the existing executives within the company, but also a strategic leader with proven operating experience and a clear vision in how to correct this sinking online media Titanic. Quarterly earnings growth y-o-y is poor (-37%); quarterly revenue y-o-y trails the industry. Yahoo has the largest number of registered internet users in the world, yet the executive team and their personnel have demonstrated their inability to monetize traffic. Ms. Decker is an analyst. She does not have the strategic insight nor the operational answers required to produce revenue. Mr. Semel does not either. Acquisitions are not an appropriate means to improve the top line. In a time where clarity is essential, this executive shuffling creates an opaque shield hiding Yahoo's chaos, bureaucracy and corporate ineffectiveness.

Wake up Yahoo: change is most definitely needed.  Moving your CFO into your most key operating/revenue position is not the answer.