The deck keeps getting reshuffled at Yahoo! (NASDAQ:YHOO). This time it's the ad sales department that is reorganizing, as Wenda Harris Millard -- the North American chief sales officer who has been at the company for nearly six years -- is stepping down to head up the media department at Martha Stewart Living Omnimedia (NYSE:MSO).
David Karnstedt, who watched over the company's domestic search ad sales, will now also run Yahoo!'s display advertising business as the two ad units merge.
Pick a conspiracy theory, any conspiracy theory. You can believe that Millard was forced out, even though graphical display advertising is one of the few strengths at Yahoo! over rival Google (NASDAQ:GOOG). You can believe that Millard left on her own, smelling smoke over the past few months of executive upheaval and opting for a fresh start elsewhere.
No matter what conclusion you come to, the end result is that Yahoo! is once again plugging holes internally rather than seeking an outside vet with fresh ideas.
Settling over meddling
Announcing that it was replacing CEO Terry Semel with co-founder Jerry Yang last week wasn't a very popular move with shareholders. The stock closed lower (after initially opening higher) the day after the move was made public. It wasn't the market vindicating Semel's leadership. It was clearly his time to go. Investors became disillusioned to find that Yahoo! was simply reshuffling the deck chairs on the S.S. Yahoo!
It's just common sense. You don't replace a struggling batter with someone off the bench when you can hit the waiver wire or work out a trade to bring in a better replacement. If a team is broken, the chances of finding the solution in a farm club or taking practice swings in the on-deck circle is unlikely at this point.
Sure, the company's stagnant share price over the past couple of years makes for a flimsy carrot in drawing proven talent, but the Google halls must be flush with egocentric executives who would love a shot at turning around a very important company.
Plan B for Yahoo!
You know it's bad when financial journalists keep pressing for drastic solutions at Yahoo!. Barron's had a crack at giving Yahoo! an extreme makeover over the weekend. It wasn't pretty. One hedge fund manager suggestion called for the company to sell off its minority stake in Yahoo! Japan. That's a pretty outlandish solution. It's not just a matter of the company's brand being more dominant in Japan than it is closer to home. Cashing out in Japan would expose the company as even more of a domestic laggard. The investment in Yahoo! Japan may be the only reason why Yahoo! shares trade at a higher earnings multiple than Google (despite growing at a significantly slower pace).
Another proposal is for Yahoo! to outsource its paid search business to Google. I can see where that would be the better near-term solution. Lesser paid search players like AOL and MIVA (NASDAQ:MIVA) are doing it. However, that's the kind of credibility-killing concession that Yahoo! does not have to make until it has exhausted all of its internal growth possibilities.
The third suggestion involves snapping up sites like WebMD (NASDAQ:WBMD), Monster Worldwide (NASDAQ:MNST), and Expedia (NASDAQ:EXPE). I have no problem there. These are niche specialists with strong brands -- a move similar to Yahoo!'s recent Rivals.com acquisition -- toiling away in lucrative areas where advertisers are willing to pay dearly to reach target audiences.
But isn't it sad? Everyone is seeing Yahoo!'s knack for plugging vacancies with internal backups as a sign of resignation. Skipper's gone overboard? Take the wheel, Gilligan. Or, in Semel's case, maybe it's Ginger, the Hollywood movie star, that slipped and fell off the S.S. Minnow.
Selling out or buying out seem to be the two most common blueprints for redemption. Sad, sad stuff, my friend. It's just not fair to Gilligan, as this "three-hour tour" becomes a stint on a deserted island, waiting for a rescue party that never seems to come.
Yahoo! is a Stock Advisor recommendation. Martha Stewart is a former selection in the newsletter. Try sampling the stock research service for more than a three-hour tour with a free 30-day trial subscription.
Longtime Fool contributor Rick Munarriz is worried that the fearless crew may still lose the Minnow. He does not own shares in any of the stocks in this story. Rick is also part of the Rule Breakers newsletter research team, seeking out tomorrow's ultimate growth stocks a day early. The Fool has a disclosure policy.
