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Yahoo to start major overhaul

SAN FRANCISCO - Yahoo Inc. is tackling its most difficult challenge since the dot-com bust with sweeping organizational changes aimed at cleaning up a mess of the Internet icon's own making.

The overhaul, announced Tuesday night, represents Yahoo's mea culpa for meandering aimlessly during the past year, to the chagrin of investors and the delight of competitors like Google Inc. that lured away online traffic and advertisers.

Yahoo has fallen out of favor on Wall Street largely because Google - the Internet's search leader - has done a far better job of figuring out which ads are most likely to elicit clicks. That action generates more profits for Google and its partners while keeping advertisers happy with a steady stream of prospective customers.

To compound its misery, Yahoo has been introducing a mishmash of products with no clear strategy on how they blend into the rest of the mix on its Web site. The scattershot approach appears to have aggravated and confused many consumers who are gravitating to new Internet hot spots such as News Corp.'s MySpace.com and YouTube, which Google just bought for $1.76 billion.

Sunnyvale-based Yahoo believes it can get back on track by consolidating its operations into three groups focused on its audience, advertising network and behind-the-scenes technology.

The shake-up will reshuffle top management, entrusting Chief Financial Officer Susan Decker to fix the problems bedeviling Yahoo's advertising system and opening a job for an executive who will be hired to guide efforts to make Yahoo's Web site more useful and relevant.

At least two top executives won't be part of Yahoo's new agenda.

Lloyd Braun, a former television executive hired two years ago to run Yahoo's media division in Southern California, has already left the company. Dan Rosensweig, Yahoo's chief operating officer since 2002, will step down in March once the reorganization is complete.