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At Yahoo, Rising Finance Chief Faces a Host of Challenges

Recharging Yahoo Ad Systems a Big Test for Susan Decker
The leading CEO Successor at Yahoo.

edit of wall street journal story

Yahoo's reorganization vaults Susan Decker, a highly regarded chief financial officer with limited operational experience, to oversee some of the companies' biggest challenges.

Under the new yahoo management overhaul Ms. Decker, 44 years old, assumes responsibility for Sunnyvale, Calif., based Yahoo revenue-generating activities, including its sales of online advertising for Yahoo and partner sites.

Yahoo's shares have slumped more than 31% since the beginning of the year, amid a delay to a key ad-system upgrade (Yahoo Panama) and slowing revenue growth the company partly attributed to increased competition from rival Web sites for ad dollars. Yahoo needs to improve organic search results.

As head of Head of Yahoo's Advertiser & Publisher Group Ms. Decker will be charged directly with tackling such ad-related issues, which some people close to the company characterize as a test of her fitness to potentially succeed Chief Executive Terry Semel, 63 years old, upon his eventual retirement.

Yahoo said its new corporate structure, which was also accompanied by the announced departure of several senior executives including Chief Operating Officer Dan Rosensweig and Yahoo Media Group head Lloyd Braun and possibly 1,300 other Yahoo employees, increases accountability and speeds decision-making.

Can Yahoo quickly repair and improve its tired search engine and second tier online-advertising systems, with the latest overhaul dubbed internally as "Yahoo Panama."?

Yahoo expects the Panama upgrade, that began in late July and delayed several times and then hastily and only partly launched, to help increase profits starting early in 2007, though key executives have conceded uncertainties about the timing or magnitude of the boost. As numerous technical snafus have plagued Panama to date.

That makes the new role of Ms. Decker, a former equity-research analyst and fan of investor Warren Buffett, a crucial one for the company. Ms. Decker, who joined Yahoo as chief financial officer in June 2000, has frequently handled more chores than the traditional finance functions of a chief financial officer, say people familiar with the matter, but her profile has increased in the past year.

Ms. Decker led Yahoo's talks with eBay Inc., in which Yahoo beat out Google Inc. and Microsoft Corp. for a pact to serve ads on eBay's auction site and marketplace in the U.S. this year. Semiconductor giant Intel Corp. last month named her to its board of directors.

Ms. Decker has limited experience in operations at Yahoo. "The Street is going to perceive this, fair or not, as a test for Sue: Can she run an operational unit?" says Benjamin Schachter, an Internet analyst at UBS Securities, whose parent company or its subsidiaries own a stake in Yahoo.

As part of a separate reorganization announced in September, Ms. Decker added operational oversight over a new unit that includes classifieds, dating, jobs, real estate, travel, autos, shopping and auctions, now part of her expanding group under this week's restructuring. Yahoo said Ms. Decker will also continue to perform her finance duties until it finds a successor in that role.

A Yahoo spokeswoman said Ms. Decker's changing role was unrelated to any succession planning and that Mr. Semel had no plans to leave the company (yet).

Regarding Ms. Decker's limited experience running operations, the spokeswoman said, "If anyone can do it, I'm sure it's Sue Decker." The spokeswoman said Ms. Decker or other company executives were not available to comment.

Under the reorganization, Senior Vice President Jeff Weiner, 36 years old, also assumes a more prominent role in the company. Mr. Weiner, who worked with Mr. Semel at Warner Bros. and the Windsor Digital private-equity firm prior to joining Yahoo in 2001, has overseen Yahoo's efforts to challenge Google in Web search and squeeze more money from its frazzled search advertising system. Now Mr. Weiner will have responsibility for a broad swathe of the company's products, including search, under a yet-to-be-named head of a newly created Audience Group.

Some people close to Yahoo describe the new role as a test of Mr. Weiner's management skills and describe his track record as somewhat mixed, given how Google is broadening its lead in Web search market share in recent years and the delay in the Panama project.

The Yahoo spokeswoman said Mr. Weiner deserved credit for Yahoo's efforts to launch its own search technology in 2004 and recent initiatives, such as its popular Answers service, while any problems with the search ad system predated his responsibility. Mr. Weiner will oversee the rollout of the Yahoo Panama upgrade through at least the first quarter of 2007.

With his resignation, Mr. Rosensweig will join a pack of top media and Internet executives whose departures from their posts have been announced this year amid a rapidly changing industry landscape. They include eBay Chief Operating Officer Maynard Webb and PayPal unit President Jeff Jordan, News Corp.'s Fox's digital czar Ross Levinsohn, Viacom Inc. CEO Tom Freston and Jonathan Miller, chief executive of Time Warner Inc.'s America Online Internet unit.

Mr. Rosensweig said he was leaving Yahoo of his own accord at the end of March, after having been asked by Yahoo to assume a role that was "to be bigger and fun" but to which he was asked to commit for another three years or longer. Mr. Rosensweig said ultimately he "was ready for something new."