Yahoo Inc (YHOO.O)
unveiled on Thursday the third phase of an extended
reorganization, bolstering the operational control of President
Sue Decker, as the company hones its independent strategy after
rebuffing Microsoft Corp (MSFT.O).
The changes centralize the management of once-separately
run consumer services into a new "audience organization,"
Decker said in a phone interview.
The move, following similar changes over the past year to
CEO Jerry Yang to power, is aimed at expanding Yahoo's audience
and better capitalizing on the growth of Web advertising.
But the reorganization, widely anticipated for more than a
week, failed to rally Yahoo's slumping stock amid a market
sell-off that sent the Dow Jones index to a 21-month low.
Yahoo shares closed 2.9 percent lower at $21.37 on Nasdaq
as investors continue to discount the value of its independent
strategy versus the previously expected Microsoft-Yahoo deal.
Yahoo boasts more than 500 million visitors to sites
ranging from e-mail to search to finance, news and sports.
The three new teams being created, all reporting to Decker,
include an audience products division led by Ash Patel, who had
run platforms and infrastructure -- Yahoo's technology side.
A new U.S. regional division will be led by Hilary
Schneider, who had run the global partner solutions group in
charge of the company's advertising. Yahoo also created an
"insights strategy team," whose leader has yet to be named.
The U.S. group will work in parallel with three existing
international business units for Asia, Europe and emerging
markets. No management changes were made there, Decker said.
In addition, Ari Balogh, who joined as chief technology
officer five months ago, has taken on increased powers and will
consolidate separate technology platforms used to run different
consumer services into a group led by Venkat Panchapakesan.
The changes were preceded by some front-line executive
departures. Jeff Weiner, once roughly on an equal plane to
Decker as head of the Yahoo Network group in charge of consumer
services, has left the company to work as an "executive in
residence" at two Silicon Valley venture capital firms.
Decker said Qi Li, vice president of engineering in charge
of the search system overhaul dubbed Project Panama -- left for
reasons unrelated to the reorganization.
Brad Garlinghouse -- head of Yahoo's communications and
communities business and famous for an internal memo dubbed the
"Peanut Butter Manifesto" calling for drastic strategy changes
-- will leave shortly, Decker confirmed.
Separately, shareholder activist Carl Icahn renewed
pressure on Yahoo to merge with Microsoft in his latest proxy
filing ahead of a showdown at the August 1 shareholder meeting.
Icahn reiterated plans to hire a "talented and experienced
CEO" and return Yang to his prior role as "Chief Yahoo" --
executive without portfolio and cheerleader for the company.
In organizational chart terms, Decker now has four regional
divisions instead of three. Marketing products, mobile Internet
and corporate marketing are unchanged while the Audience
division replaces what had been the Yahoo Network group and
Schneider's partnership division folds into other functions.
Several Wall Street analysts said the reorganization
emphasizes Decker's growing power at Yahoo.
"It begs the question, what is Jerry Yang doing?" Sanford
C. Bernstein analyst Jeffrey Lindsay said. "It looks like there
has been a significant shift in power towards Ms. Decker."
"Clearly if there are three new groups reporting to her
that would suggest to us that she's taking a larger role in
operations," he said.
Canaccord Adams analyst Colin Gillis agreed, saying: "We
certainly see Sue taking an increasingly active role in the
company and Jerry probably likes his Chief Yahoo title after
what's been a very grueling year."
In a statement, Yang said the latest changes would help
Yahoo capitalize on the convergence of the two primary types of
Web advertising -- search and display ads. Users see search ads
alongside keyword search results, while display ads, preferred
by many corporate brand marketers, run on content pages.
Decker told Reuters a restructuring of the consumer-facing
side of the business and recent executive departures did not
reflect a broader change of power within Yahoo's senior ranks.
"It doesn't really change the scope of my
responsibilities," she said. "I am responsible for the business
and Ari is responsible for the technology and engineering."
(Editing by Braden Reddall)
U.S. brewer Anheuser-Busch Cos Inc
(BUD.N) rejected on Thursday InBev NV's (
takeover bid as inadequate, but left the door open to a higher
The maker of Budweiser said InBev's $65-per-share bid
undervalued the company, which controls nearly half the U.S.
beer market, owns half of Grupo Modelo (
and 27 percent of China's Tsingtao Brewery Co Ltd (600600.SS).
The bid -- which was unanimously rejected by Anheuser's
board -- represented a 24 percent premium to Anheuser's closing
share price a day before reports of merger talks surfaced, but
the company said it also undervalued the impact of its growth
plan, which includes a cost-cutting initiative code-named "Blue
"While Anheuser-Busch pursues its plan, its board will
continue to consider any strategic alternative that would be in
the best interests of Anheuser-Busch shareholders," Chief
Executive August Busch IV said in a letter to InBev Chief
Executive Carlos Brito.
"The board is open to consider any proposal that would
provide full and certain value to Anheuser-Busch shareholders,"
The St. Louis-based company said its 13-member board
thoroughly studied the proposal with independent financial and
legal advisers on multiple occasions during the two-week period
since the proposal was made. The board's independent directors
also met alone to examine its merits, it added.
The company said it aims to deliver more than $750 million
in savings through 2009 and $1 billion in savings through 2010.
was expected to also announce that it may seek to sell its
theme park and packaging businesses, and a possible special
Anheuser shares rose to $61.90 in after-hours trade from
their New York Stock Exchange close of $61.35.
(Reporting by Martinne Geller, editing by Mark Porter and
The economy grew at a 1 percent annualized rate in the first quarter, helped in large part by stronger sales of U.S. products overseas, the Commerce Department reported Thursday.
That was a tad stronger than the government's previous estimate of 0.9 percent growth for the quarter. And, the new reading was better than the anemic 0.6 percent growth rate logged in the final three months of last year.
Nonetheless, the two quarters together marked the slowest growth in five years. The economy has been bruised by housing, credit and financial problems. That led consumers during the first quarter alone to boost their spending at the weakest pace since the 2001 recession.
However, the government's tax rebates, the centerpiece of a $168 billion stimulus package, have helped to energize consumer spending in recent months, which should bolster the overall economy's performance in the April-to-June quarter.
The Federal Reserve, which on Wednesday halted a nearly yearlong rate-cutting campaign because of concerns about inflation, specifically credited "some firming in household spending" with a role in keeping the economy expanding.
As the stimulative effects of the tax rebates fades, though, some analysts worry that the economy could hit another rough patch.
"The economy is far from out of the woods," said Nigel Gault, chief U.S. economist at Global Insight. He predicted second- and third-quarter economic growth would benefit from the tax rebates but he believes there will be a "relapse" in the final quarter of this year as the effect of the rebates wanes.
On Wall Street, stocks tumbled as record-high oil prices and warnings of trouble in the key financial, automotive and high-tech industries rattled investors. The Dow Jones industrials plunged 358.41 points to 11,453.42 — its lowest finish since Sept. 11, 2006.
Other reports issued Thursday showed weak spots in the economy.
New applications filed for unemployment insurance held steady at a high level of 384,000, the Labor Department said. The number of people continuing to draw unemployment benefits climbed to 3.1 million, the most in more than four years. Employers have cut jobs each month so far this year as they cope with fallout from high energy prices, the housing slump and harder-to-get credit.
The National Association of Realtors, meanwhile, reported that sales of previously owned homes rose in May, although prices continued to drop. Sales went up 2 percent to a pace of 4.99 million units. The median sales price, however, fell to $208,600, down 6.3 percent from a year ago. That was the fifth biggest year-over-year price decline in records that go back to 1999. Many analysts think housing prices need to stop falling or start rising for the ailing housing market to get back its health.
Fallout from the housing crisis continued to be a big drag on first-quarter growth: builders slashed spending on housing projects by 24.6 percent on an annualized basis. That wasn't as bad, though, as the 25.2 percent cut made in the fourth quarter, the most in 26 years.
For now the second quarter is shaping up much better than earlier estimates of little, if any, growth for the period. At one point, some thought the economy might contract. Some second-quarter projections now range from more than 1 percent to just shy of 2 percent.
That still would be considered sluggish. More normal activity would be along the lines of a 2.5 percent to 3 percent pace.
The Fed may be able to leave interest rates where they are for a while so that the economy can gain traction. However, some believe the Fed might be forced to boost rates later this year to fend off inflation.
Others think the Fed won't start to push up rates until next year. Either way, the next move on rates is likely to be up, not down, analysts said. The timing will hinge on how energy and food prices and other inflation barometers behave in the months ahead.
Oil prices zoomed Thursday — passing $140 a barrel and then retreating a bit to close at a record $139.64 a barrel.
An inflation measure linked to the gross domestic product report showed "core" prices, which strip out food and energy costs, increased at a rate of 2.3 percent in the first quarter. That's up from a previous estimate and outside the Fed's comfort zone.
There's been a lot of talk about whether the country has fallen into a recession. The new GDP statistics did not meet what analysts consider one definition of a recession — two straight quarters of shrinking economic activity. But that didn't happen in the last recession in 2001, either. And other barometers — nationwide job losses and shriveling paychecks — have pointed to a possible downturn. Such a determination is made by an academic panel, usually well after the fact.
"The first half will be more difficult than the second half," Commerce Secretary Carlos Gutierrez told The Associated Press. Although "the predictions were so dire," the first quarter's performance shows "how resilient our economy is by being able to show growth in the face of challenges."
The Fed hopes its powerful series of rate reductions and the government's stimulus will lift the country out of the doldrums over time.
"By the first half of next year we look for the underlying health of the economy to finally improve," said Stephen Stanley, chief economist at RBS Greenwich Capital. "But for the balance of this year, it looks like the economy is trapped in a subpar growth pace but not a recession — economic limbo."
On the Net:
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