After Yahoo reorg, will Microsoft go to Defcon 1?

Yahoo buys itself valuable time with its long-awaited reorganization. Now the countdown really begins to see whether real change is in store and whether Steve Ballmer will return to the negotiating table.

For the first time in several months, Jerry Yang can exhale. Though not for very long.

Now the countdown really begins. The long-term question: Will any of this effect substantive positive change? The short-term question: Will Steve Ballmer decide to return to the negotiating table. More about that in a moment.

The new management structure announced today by Yahoo may not please everyone--and don't expect cartwheels from Carl Icahn--but it relieves some of the immediate pressure on Yang and Sue Decker, who were being pressed by unhappy shareholders to shake things up.

The folks still out for executive scalps won't be mollified by what they'll predictably dismiss as a PR stunt. Well, yes, Yahoo is counting on the appearance of change. But that's only part of what's going on.

Even though there's still an awfully long to-do list, at least the Yahoo's two most senior leaders can rely on the new handpicked team to pull in the same direction. That wasn't so obvious during the last several months. After the string of high-profile resignations from the company, it was unclear how much strategy disagreements or simply burnout played in the sundry personnel departures. What Yang and Decker needed most of all was a team they could trust to buy into their vision for the company.

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Reshaping Yahoo
The new reorg makes some big changes, but how much will it help the company?

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"Put yourself in Yang's place," says a source close to Yahoo. "The guy took over under duress and only had about six months before there was a hostile takeover attempt. Then came a revolt from shareholders. Then he had to decide whether to outsource search. This reorganization is something needed. There needs to be a healthy change in the people (under Yang.) It's time for a different generation to run those positions."

That same source explained that the company is anxious to regroup and accelerate Yahoo's corporate DNA. In particular, the source added, "they need to get products out faster and to different areas of the distribution system faster."

In the reorganization announced today, centralization was the key with three teams now reporting to President Sue Decker Yahoo's also forming a cloud computing and data infrastructure group. (That could be really interesting. We'll have more details later today.) But the storyline for this release could be summed up: All roads now lead through Decker.

From the release:

"The changes we're making today will help deliver superior global products for users and enable faster and better decision-making," Decker said in a statement. "This is a logical next step in light of our success last year in moving to a more centralized approach to developing world-class marketing products. We have planned these changes deliberately over the past several months to clarify responsibilities and to capitalize on the scale advantages while allowing for fine tuning to meet local market needs."

Now the countdown really begins to see whether real change is in store and whether Steve Ballmer will return to the negotiating table. Meanwhile, there's movement on another front.

Kara Swisher, who had the scoopon the reorganization, also is reportingthat Icahn and other investors are "pushing Microsoft to radically boost the value of its Google-alternative search deal and buy 33 percent of Yahoo for $30 to $32 a share (instead of the one-sixth of Yahoo at $35 a share Microsoft offered in connection with its last search deal). Microsoft is seriously considering this.

And from what I've been hearing Microsoft is seriously thinking about giving it another go, although it's still unclear whether Steve Ballmer has ordered his team to officially engage Yahoo. But at this rate, Defcon 1 status can't be too far away.

 

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