The Internet company announced the changes Thursday as part of a greater effort to become the "starting point for the most users, the must-buy for the most advertisers, and the platform of choice for developers."
Yahoo's reorganization is the latest of several attempts over the last 18 months to shore up its resources. It comes after Microsoft's failed takeover bid, the announcement of a deal with competitor Google to cooperate on ad sales, and falling stock prices.
Just one day before announcing the reorganization, Yahoo sent a letter to stockholders explaining its recent decisions. That letter contained the same language it used in Thursday's announcement about being the starting point for Internet users and a must-buy for advertisers. It said the company could see up to $450 million in cash flow from the agreement with Google.
Yahoo plans to put Google's sponsored search ads into its own search results, while retaining its own search algorithm. It will receive fees from Google when its users click on Google ads.
Yahoo CEO Jerry Yang said the organizational changes are "designed to put us in an even better position to leverage our leading global audience and capture the opportunity we see in the convergence of search and display advertising."
The reorganization aims to centralize consumer product development, a move Yahoo said will help it release products globally. It also will create a U.S. region for taking products to market. Yahoo said it has formed an "insights strategy team" and plans to improve its technology for better data use and analysis, as well as coordination between engineers and product teams.
Three new teams will report to Yahoo president Sue Decker. They include an audience products division for companywide product strategy and product management, led by Ash Patel, former platforms and infrastructure group manager; the U.S. region team, led by Hilary Schneider, who has led Yahoo's global partner solutions group; and the insights strategy team, whose leader has yet to be announced.
Yahoo said it also plans to develop its cloud computing and storage infrastructure, and rewire Yahoo onto a common platform.
To that end, the company will form a cloud computing and data infrastructure group; move all consumer-facing platform teams to the audience technology group, led by Venkat Panchapakesan; and put Prabhakar Raghavan in charge of search strategy. He will continue to lead Yahoo Research. Tuoc Luong will lead the search product team in the interim, while continuing to lead search engineering. David Ku will lead the advertising technology group within search.
Chief technology officer Ari Balogh said the company has carefully evaluated its choices to determine how to organize the technology group to best support the company's business strategy.
"I'm excited by the depth of our team, which -- combined with the talent we continue to recruit -- will execute even better under this new structure," he said.
Decker said the changes would "enable faster and better decision-making."
"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," she said in an announcement. "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."
Yahoo said its marketing products division, connected life, and corporate marketing groups will continue operating as they have.