UPDATE 3-Yahoo reorganizes businesses under Decker

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By Eric Auchard and Michele Gershberg

SAN FRANCISCO/NEW YORK, June 26 (Reuters) - 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 to Yahoo's advertising business and the elevation of Decker and CEO Jerry Yang to power over the past year, is aimed at better capitalizing on the growth of Web advertising through Yahoo's large audience.

Yahoo boasts more than 500 million visitors to sites ranging from e-mail to search to finance, news and sports.

But the reorganization, widely anticipated in recent weeks, 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.

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 top executive departures. Yahoo leaders and outgoing executives said the exodus was due to a variety of motives, with many leaving for personal reasons and only a few departures related to the latest reshuffle.

Jeff Weiner, once in charge of consumer services, left the company following the birth of his first child last month and plans to return to work in September 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 strategic changes -- will leave shortly, Decker confirmed.