Change is good

Yahoo! restructuring seen as a plus

When Yahoo! announced its big restructuring last Tuesday, its shares were at $27.43. Monday they closed at $26.49.

Apparently, judging from the stock movement, or lack thereof, the departure of a few executives and a reorganization into three distinct units wasn't a bold enough move for investors who have already watched their Yahoo! shares erode 30% this year.

Wall Street analysts, though, seem pleased.

JMP Securities analyst William Morrison called the move "a good first step in what we expect will be several quarters of change at the company."

Merrill Lynch analyst Justin Post said the reorganization "is consistent with our thesis that Yahoo! can take steps to better capitalize on the company's traffic assets."

The three new Yahoo! units are audience, monetization and technology.

The new structure "should help improve execution by aligning responsibility directly with the drivers of financial performance," Goldman Sachs analyst Anthony Noto said.

While several analysts weighed in on Yahoo!'s actions of last week, none changed their investment thesis all that much.

Jefferies & Co. analyst Youssef Squali, for example, maintained his $39 price target on shares, though he predicted that "the stock may continue to languish during the transition period following the reorganization and we would expect it to start working longer term."

The reorganization puts Sue Decker, now interim chief financial officer, in charge of the monetization unit and on deck for the CEO slot whenever Terry Semel decides to retire, most analysts said.

It also meant the departure of chief operating officer Dan Rosensweig and Lloyd Braun, the former TV executive who was bringing professionally produced video content to Yahoo!

Those departures, Squali said, should be viewed positively by shareholders — Rosensweig, because of Yahoo!'s "inferior operational capacity compared to competitors such as Google," and Braun, because it "reflects Yahoo!'s de-emphasis of proprietary media and content and increased focus on user-generated content."

JMP's Morrison agreed, noting that "Braun was brought into Yahoo! to create proprietary entertainment content for the company and has largely been unsuccessful at doing so while spending millions to build out Yahoo!'s presence in Hollywood."
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