Microsoft said today that longtime company veteran Yusuf Mehdi will be shifting roles to head marketing for the unit that includes its Xbox gaming division. Previously, Mehdi was in charge of the company’s online services division audience efforts. He will now report to Don Mattrick, president of the Interactive Entertainment Business.

Here are the internal memos on the move from Online Services Division President Qi Lu and from Mattrick:

Hi Everyone,

This email is to inform you that Yusuf Mehdi, Chief Audience Officer for OSD, will be moving on to a new and exciting chapter in his career, working for Don Mattrick, President of the Interactive Entertainment Business (IEB), as the Chief Marketing Officer for IEB, effective 12/05/2011.

Yusuf and I have been discussing his career plan for several months, and we both felt with OSD and OABG’s success and momentum, the time is right for Yusuf to take on a new challenge for Microsoft. With more than ten years of service in Microsoft’s online services businesses, he has been a trusted adviser, a great leader of people, and has helped get us to where we are today in OSD. We are fortunate to have had Yusuf be an important part of OSD for the past ten years, and are equally fortunate that he is staying close, helping IEB continue its great momentum as it becomes a global entertainment brand for Microsoft.

Throughout my tenure at OSD, Yusuf has been a key member of the OSD LT and a trusted partner, from whom I have learned a tremendous amount about marketing, the industry, and Microsoft. I have thoroughly enjoyed working with Yusuf and I am confident he will do an amazing job for Don, and continue to be a great partner to OSD and a great advocate for Bing and MSN.

Yusuf has been involved with leading Microsoft Online Services businesses longer than anyone else on the OSD LT, and has been a pivotal leader at critical milestones of our division’s journey from the early days of MSN, to the original MSN and Live Search products, to the launch of Bing and the consummation of key strategic deals for OSD and MS, including Yahoo!, Facebook, Twitter and Nokia. Most importantly, he has built a world class marketing, business development, strategy, and product management organization that has made incredible contributions to the success of OSD and Microsoft. I want to take this opportunity to express my heart-felt thanks to Yusuf for everything he has done for OSD.

I have asked each of Yusuf’s direct reports to step up their contribution to help lead through this transition period. On an interim basis, all of Yusuf’s directs will now report into me. I have also asked that Mike Nichols help with coordination of the OABG ROB and represent OABG at the OSD LT level, in addition to maintaining his current responsibilities as GM of Bing Product Management.

Please join me in congratulating Yusuf in his new role, thanking him for his many contributions to Online, and wishing him all the best.

Thanks.
-Qi

From: Don Mattrick
Sent: Tuesday, October 11, 2011 3:33 PM
Subject: RE: IEB Global Marketing News

After 21 years of outstanding service, Mike Delman has decided to retire from Microsoft at the end of the calendar year. Mike’s decision will allow him to spend more time with his family. He will also continue his non-profit efforts with Children’s Hospital and lecture at the USC Graduate School of Business.

While there’s never a great time to lose a valued leader, the time is right for Mike and the business to transition as we embark on our next journey to significantly grow our business in the next five years.

Between now and the end of the year, Mike will lead marketing through our biggest holiday ever, continue to set us up for long-term success, and work with me and Janet Zimmerman to identify his successor.

Mike’s marketing contributions at Microsoft are innumerable — he joined Microsoft in 1990 as director of corporate communications, responsible for advertising, collateral, point of sale, direct marketing and worldwide packaging for the entire Microsoft product line. Mike later became the director of marketing for Microsoft EMEA. He also served as general manager of the MSN and managed worldwide marketing operations, data and analytics, advertising, relationship marketing and events in the Central Marketing Group.

In 2008, he joined IEB as the CVP of IEB Global Marketing. Here in IEB, Mike played an extraordinary role in redefining the marketing organization. Specifically, under his leadership, the marketing organization has deepened the connection between marketing and product development, reinvigorated our research and business intelligence efforts, and set the course for repositioning Xbox from a core games brand to an entertainment brand for everyone. Over the same time period, the Xbox business doubled. I also want to thank Mike for his leadership in working with the team in EMEA to drive growth and success in that region.

Please join me in thanking Mike for his years of great work, and a heartfelt congratulations on his upcoming retirement. He has always been a strong strategic advisor for me, and I look forward to spending the next few months together.

Best,

Don

As happened last week to its centralized marketing division, Yahoo has broken up its Customer Advocacy organization, with its staff distributed to the various regions and the product unit of the Silicon Valley Internet giant.

Customer Advocacy has been led by EVP Jeff Russakow, whose fate is now similarly unclear as it is for CMO Elisa Steele, whose division was diced up to the regions last week.

Both execs — who were hired by fired CEO Carol Bartz — plan to remain at the company until at least January, sources said.

Russakow, according to his Yahoo bio, has had “global responsibility for all of Yahoo!’s customer support functions, including audience, small business, ad operations, and search network quality.” He came to Yahoo from previous jobs at Symantec and Adobe.

Interim CEO Tim Morse sent a memo to employees about the change, noting Russakow is looking for his next opportunity, using much the same language as Steele used in her internal email.

The moves are interesting, given Yahoo’s current effort to find a new strategy, which includes a possible sale of all or parts of the company. But there is also a strong sentiment within the company to reorganize around strengthening its advertising platform and products.

I have a call into Yahoo PR for comment (but let’s assume I am accurate about this, shall we?).

More, obviously, to come.

Yahoo is drastically rejiggering its marketing division, according to an internal memo sent today to employees from its Chief Marketing Officer Elisa Steele, in a move that seems to leave her future role unclear.

Steele was brought to Yahoo over two years ago by now-fired CEO Carol Bartz — whom she had been very close to — and charged with turbocharging and reorganizing the unit, which has never been strong.

While Steele certainly did overhaul the marketing department, some of her efforts, such as Yahoo’s pricey “It’s You” advertising campaign, have not worked out. And, largely due to the ongoing turmoil at the company, its brand has suffered under her watch.

The changes, which appear to be at the behest of Steele (though you never know at Yahoo!), will shift the major marketing functions back to the regions of the Silicon Valley Internet company from its current global centralized one.

“I believe we now need to bring marketing decisions, marketing talent and marketing budgets closer to the customer — and into the regions that depend on these critical plans,” she wrote. “We need to further link our marketing strategies to revenue growth, sales objectives and overall accountability.”

Since Steele took over the marketing department at Yahoo several years ago, she has been moving those powers to a more centralized system.

No longer.

In the internal memo, which I obtained and is embedded below, Steele outlines the shift, which will remove a lot of that control of marketing from the HQ and out to its business units.

Steele said in the email to the marketing team that she will remain at the company as CMO for now, although seems to indicate that she is also evaluating her future role.

“My current role as CMO on CEO staff is unchanged,” she wrote. “However, whatever I decide to do next for my career is my choice — and I’ll think about that on my own timeline.”

Sounds like an eventual departure to me, with Steele trying hard to stress she was going out on her own motor, even though giving up contro of big parts of your unit is unusual.

In any case, Steele obviously is betting now that on-the-ground control of marketing will help improve things for the beleaguered company. Here’s the memo:

Team,

It is critical for Yahoo! to grow faster and become more agile. We need to make decisions to accelerate the Regions’ growth plans around the world, and Marketing plays a crucial role in helping develop, support and execute these plans. We’ve built an integrated marketing machine that is an asset to help the company grow now and into the future. When we assembled a global and centralized organization in 2009, we took the opportunity to create best practices, establish consistency, deepen domain expertise, enhance functional capabilities and innovate for one of the biggest brands in the world. And, in the past 12 months, Global Marketing took home dozens of industry awards for marketing leadership in integrated consumer marketing, digital marketing and event marketing – including the acclaimed Cannes Lions, a Clio, a Webby and IAB Awards. Our Marketing achievements have been broad, deep and well recognized.

Now that we have this strong capability, it is time to leverage it even further. I believe we now need to bring marketing decisions, marketing talent and marketing budgets closer to the customer — and into the regions that depend on these critical plans. We need to further link our marketing strategies to revenue growth, sales objectives and overall accountability. Therefore, I want to put the marketing programs and tools we’ve developed right with the Sales and Audience teams responsible for the business outcomes.

It is with this in mind that I recommended a marketing reorganization plan to align to these objectives, accelerate decision-making and simplify roles. The plan centers on decentralizing the current global team into 2 types of specific teams:

1. Regional Marketing: Our regional marketing teams will move to report directly to the Regional leaders in Americas, EMEA and APAC.

2. Corporate Marketing: Our strategic brand, communications and marketing services teams will remain centralized and report into HQ.

This was my proposal to Tim for the best interests of Yahoo! today, and I am glad he agreed with my thinking. I really hope you will endorse and support these changes, too. Yahoo! needs your help and expertise to insure this important next phase is successful.

I want you to know how proud I am of your achievements and contributions. I also want to thank you for the incredible support you have shown me over the past 2.5 years in the current organization. It’s been an amazing brand adventure and working with each of you has been a great source of satisfaction.

My current role as CMO on CEO staff is unchanged. However, whatever I decide to do next for my career is my choice — and I’ll think about that on my own timeline. First, I will work with Tim, my peers and all of you to ensure a smooth transition — and that is my focus for now.

We have a meeting scheduled with the marketing leadership team on Monday and I can address any questions you may have about this transition.

Thanks,

Elisa

Amazingly, nothing bad happened to me at Google. Everyone just laughed at me a lot, all the way up to the top, for having committed what must be the great-granddaddy of all Reply-All screwups in tech history. But they also listened, which is super cool.

Google engineer Steve Yegge, who accidentally publicly posted what was meant to be an internal memo criticizing the handling of Google+

Yahoo’s interim CEO Tim Morse penned another weekly email to staff at the Silicon Valley Internet giant today; the only one from the company’s leadership, which sent out two internal memos last week.

It’s below, and again addresses the swirl of news around Yahoo’s plans as part of its ongoing strategery over the company’s future.

“I know there was some more swirl out there this week,” wrote Morse. “You know we don’t comment on rumors or speculation and for now, everything has been just that — rumors.”

Well, not so much, which I will be weighing in on soon via an old-fangled thing called reporting, Tim!

Until then, here is the latest missive:

Short note from me today. Before we head into the weekend, I wanted to give a shout out to the Flickr team for their great work on their new mobile features. What they rolled out this week got rave reviews and tons of great buzz. We also had a nice Demos and Drinks event here in Sunnyvale that I was able to check out, so thanks to all the Yahoos involved in that.

Last but certainly not least, I want to say thank you to the teams that are working hard on Advertising Week. It kicks off on Monday, and we’ve got some big stuff in store, so stay tuned on that front.

I know there was some more swirl out there this week. You know we don’t comment on rumors or speculation and for now, everything has been just that — rumors.

Rest assured, when we have something to share, we will. In the meantime, please know how much the entire executive team appreciates your great work — and please keep it up!

Have a good weekend.

Tim

According to sources, AOL’s head of Europe Kate Burns has left the company and has been replaced by Goviral chairman and co-founder Jimmy Maymann.

Goviral is a unit of AOL’s Advertising.com and has been a bright spot in its ad business. Goviral’s CEO René Rechtman will now serve as the new head of the European Advertising.com Group.

Burns, who is SVP of sales and operations for AOL Europe, does not seem to have immediate plans and will stay at the company until the end of October.

Maymann reports to Ned Brody, who was recently named AOL’s sales head and Chief Revenue Officer.

According to an internal memo, he will head the Huffington Post owned-and-operated businesses for both Europe and Latin America. The Huffington Post unit has taken over all of AOL’s content businesses.

In related news, Peter Kafka reported earlier today that AOL’s music head had left the New York-based company for a start-up.

The change in Europe happened last week, the second international shift at a big U.S. Internet concern. Yesterday, I reported that Yahoo’s Latin America head left the company.

In fact, here is the memo from Brody, if you want go to town:

From: “Brody, Ned”
Date: Wed, 21 Sep 2011 09:40:03 -0400
To: AOL_Advertising, B2B, FriendsofAdvertising, B2B_Partners
Cc: AOLExecTeam
Subject: Organizational Update

Team,

As you know, one of our focus areas has been to re-emerge as a dynamic player outside of North America. As a part of this plan, we made the strategic decision two weeks ago to focus these sales and marketing efforts on our core global businesses: the Advertising.com Group and The Huffington Post. I’m excited about the plans we have to move these businesses forward.

To best support these changes, we’ve formalized an operational structure that we believe will set us on the path for even greater global growth. I’m excited to announce that René Rechtman will serve as the new head of the European Advertising.com Group business and Jimmy Maymann will lead the Huffington Post O&O business for Europe and Latin America. René and Jimmy will report directly to me.

René will lead our strategy of partnering with publishers and advertisers across Europe. We believe that his proven leadership and expanded focus on our publisher and advertising businesses will allow us to scale quickly. Advertising.com and goviral operate in over 10 countries in Europe and we have an opportunity to fulfill our mission of building the strength of quality publishers and the strength of Europe’s best brands.

To help meet the outpouring of demand in many countries for our brand and content, we will be moving our global content platforms back into Europe — having started with the UK — and opening opportunities in Latin America. Jimmy will lead our European and Latin America operations, pushing our content expansion opportunities. He is one of the most talented entrepreneurs in our organization and the right person to lead this forward.

Our strong leadership team will continue to support the execution of our strategy. Nimeshh Patel will continue his role as head of European operations and will report directly into Artie Minson. Sarah Gavin will continue to lead marketing and communications, reporting into Maureen Sullivan. Noel Penzer will now serve as VP, Europe and Latin America, reporting into Jimmy. Luke Aviet will take on a wider European remit in the Advertising.com group, focusing on internationalization and expansion, and will continue to report into René.

It’s important to note that our current progress could not have been achieved without tremendous leadership. At this point in our company’s development, Kate Burns has made a personal decision to leave AOL to spend more time with her family and personal pursuits. Two years ago, Kate came on board as the SVP of European Sales and CEO of the European operation to help turn the business around. In that short time, she has successfully refocused our efforts, established a strong leadership team and scaled the new business operational structure.

She and the team have done this well ahead of schedule and I’m particularly proud of this progress. Kate will remain on board until the end of October in an advisory capacity and to help with the transition. Please join me in wishing Kate well in her future endeavors.

We told the world AOL would return to the global stage and that’s exactly what we did and what we’re doing. We have a number of exciting launches in the works in the coming months as well as executing on our daily commitment to our consumers, advertisers and teams. I ask that you continue to stay focused on our goals and most important, celebrate the amazing accomplishments of our collective teams in advancing our global strategy.

Best,

Ned

“It is critical that we speak with one voice,” wrote Whitman in an internal email I obtained (below).

Thus, she has appointed longtime HP exec Lynn Anderson (pictured here) to “take on the role of acting Chief Communications Officer reporting directly to me,” according to the memo she sent to senior leaders at the company.

Not sure what “acting” means yet, but Anderson has gotten the job that was once that of former SAP exec Bill Wohl. He was put on “special assignment” late this summer, whatever that means, with his duties being taken up by Global Marketing EVP Marty Homlish.

Now Anderson is taking over, having helped during the Wohl transition. She previously headed up influencer relations for HP’s enterprise business.

And before that, she worked on a variety of marketing jobs for HP Canada. Anderson’s background is wonky, according to her company bio: “Before joining HP in 1983 as a systems engineer, Anderson was a programmer, analyst and operations manager for several IT departments.”

During the initial announcement of her new job running HP, Whitman relied on longtime comms adviser Henry Gomez. Gomez, who worked closely with her when Whitman was CEO of eBay and later on her unsuccessful run for California governor, has a consulting business and presumably did not want to work full time for HP.

Here’s the memo:

To: Senior Leaders
Subject: Acting Chief Communications Officer

As we continue to execute our strategy for HP, communications will be an extremely important function and it is critical that we speak with one voice.

I want to thank Marty Homlish, EVP Global Marketing who stepped in and provided leadership during a critical junction. Going forward, I have asked Lynn Anderson to take on the role of acting Chief Communications Officer reporting directly to me.

Please ensure that Lynn is brought into all communications activities.

Regards,

Meg

Today, Yahoo leaders — all of them in two different memos — took to the keyboards to fill their 14,000 employees in on what’s up.

Reading them, Yahoos must now be more confused than ever.

To summarize: Yahoo is for sale, sort of. But we’re taking it slow, because we always like to drag out the uncertainty here at Sunnyvale HQ. Hey, keep working hard and innovating, despite the still-matrixed system. But don’t fret that your job and career hang in the balance. And have a good weekend!

In the first email, Yahoo Chairman Roy Bostock and co-founders David Filo and Jerry Yang — also a director — penned a rambling missive, which finally admitted the company was indeed, as was first reported here, for sale.

Yahoo said hired-gun investment advisor, Allen & Co., was “fielding inquiries from multiple parties that have already expressed interest in a number of potential options.”

Not to be a niggler, but didn’t Yang tell the troops at an all-hands meeting recently that Yahoo was not for sale?

Details! Thus, said the memo, until the company sorts out all the offers just pouring in — not so much, but when you’re selling a house, you put on the dog — Yahoos had to keep working hard.

Therefore: “What Yahoo! needs to do better — and we’ve talked about this — is accelerate innovation, reignite inspiration, and give our users what they want now — great content that is engaging and easy-to-use on any device and provides an experience in which they can participate and contribute. Perhaps most importantly, we need to anticipate what they will want next.”

You’ve. Talked. About. This. You mean to try to make cool stuff like every other tech company — Apple, Facebook, Google — already does? Mind-blowing.

After a little throat-clearing on its fake search for a new permanent CEO and some media-bashing (yes, this all my fault!), the memo noted that all this fancy strategery is going to take “months, not weeks.”

(Is it just me or does it feel as though former CEO Carol Bartz was fired a badillion years ago, instead of just weeks ago? Plus, I actually believe I officially now miss her kooky-but-genuine Friday staff emails.)

The Gang of Three email was followed by one from the incredible shrinking interim CEO Tim Morse, who said Yahoo was not in “limbo,” due to all this obvious limboness about the strategy.

“That means we will not be sitting still over the next few months,” Morse wrote. “We are actively making decisions and taking action.”

In other words, nothing to see here. Except everything.

Oh, I give up — just read for yourselves:

Dear Yahoos:

In our recent all hands meeting, we talked about the Board’s strategic review to help return the Company to a path of robust growth and industry-leading innovation. While our teams are working to evaluate the many opportunities by which Yahoo! can continue building on our success, all kinds of people have been — and will continue — speculating in the media about where that work is headed, so we thought it best to provide you with some additional context directly from those of us who are closest to it. We don’t have specific news to share with you today, but we are committed to communicating with you directly from time to time — especially given the level of external swirl — so that you know where we are in the process. You can expect periodic updates from us and we encourage you to communicate with us as well.

At the heart of what we are doing is our belief that Yahoo!’s core strengths are not only relevant to where users are going today, but can serve as a foundation for the next phase of our company’s growth. Consider our strengths: we have 680 million users worldwide. We have nine of the #1 properties in the U.S., and we are a leader in display advertising. Our brand is iconic — we are not the only ones who bleed purple. By whatever measure you want to use — engagement, quality of products and services, our value to our advertisers — we all feel that we have what it takes to succeed. Also, our Asia assets remain one of our top priorities and we continue to work well with the teams there. As you may have seen, Alibaba Group has just announced a liquidity event for its employees that reflects a continued appreciation in its value, and therefore of the value of our stake.

What Yahoo! needs to do better — and we’ve talked about this — is accelerate innovation, reignite inspiration, and give our users what they want now — great content that is engaging and easy-to-use on any device and provides an experience in which they can participate and contribute. Perhaps most importantly, we need to anticipate what they will want next. That is the path to enhancing the value of Yahoo! for all of its stakeholders, including its users, customers, shareholders, partners and Yahoos everywhere. Our strategic review is designed to help us map out the best way to achieve that.

At this point, we cannot offer many specifics about the Board’s review; we’ve just gotten started. You should know that the entire Board and management team are fully aligned and unanimous in their views regarding the scope of this work. Allen & Company was a logical choice to help us in this review, because they have been one of our advisers for some time, and this is familiar territory for them. Achieving success in our sector is intrinsic to what they do for a living, and they will be constructive partners.

Our advisers are working with us to develop ideas that we will pursue proactively. At the same time, they are fielding inquiries from multiple parties that have already expressed interest in a number of potential options. We will take the time we need to select and structure the best approach for the company, its shareholders and employees.

In addition, as we announced previously, the Board has commenced a search for a permanent Chief Executive Officer. That process also continues.

When we have updates that we can share we will do so. There will be plenty of rumors and speculation as different parties try to advance their agendas in the media — but it is important that we not be distracted by the rumors and speculation.

You are instrumental to the success of our business — we can’t do it without you. While we will move with a sense of urgency, this process will take time. Months, not weeks. We know that’s a lot of potential distraction, but we believe it will be worth the wait. We are forging a path to a next phase of growth for Yahoo! that feels like our best days: fun, full of possibility, and always in search of how to deliver the new thing people want from us. Together, we can write the next great chapter in the Yahoo! story and secure our place as one of those rarities: an internet company that endures.

Jerry
Roy
David

Yahoos,

I’m sure by now you’ve all seen the note from Jerry, David and Roy. I want you to know that while the Board works through all of our options, CEO Staff and I have been charged to move the company forward.

That means we will not be sitting still over the next few months. We are actively making decisions and taking action.

In fact, for three days this week, CEO staff and I met to do just that. Our planning for 2012 is well underway, and we continue to execute on our current plans — such as our Social Chrome announcement this week. (I want to make sure to give a big shout out to the team behind it; it’s getting some great press.)

You see, the Board is confident we can execute our current game plan in the short term. We’ve done some truly great work on updating the foundation of Yahoo!, and we’ve got some good things in the immediate pipeline. So, the Board’s focus is where it should be — on our long-term outlook, and how we best position ourselves to be successful in 3-5 years.

We need a flexible, visionary plan. That’s why the Board is actively looking at all the options available to put Yahoo! on a strong trajectory.

That being said, while the Board makes this decision, it does not mean we are in limbo. We have to keep Yahoo! moving ahead. And to do that, there are three things I need Yahoos everywhere to focus on:

1. Speed: Emphasize quick execution and decision-making

2. Accountability: Do what you say you’re going to do — and take ownership for time to market, monetization, user engagement, quality, or whatever metric defines success for your team

3. Purpose: Rally behind our mission and purpose: creating deeply personal digital experiences.

In the meantime, we will keep you updated as much as we can. And we will earn your trust — we know we have to.

Have a good weekend.

Tim

To: Everyone

Re: The Memo

There was a whole lot of hubbub last week about an internal email that Groupon’s CEO and co-founder Andrew Mason sent out to the employees of the Chicago-based social buying company, which AllThingsD got hold of and published.

A lot of the noise centered less around the content of the memo — which sought to answer back at Groupon’s growing chorus of ever-noisier critics, who have been relentlessly pillorying the company over a range of financial issues since it filed for an IPO in June — than on the hows and whys of its release.

And, of course, whether the email would get Groupon into trouble with the Securities and Exchange Commission over whether Mason had touted the company in violation of regulatory disclosure rules.

News of that happening or not will come sooner than later, I suspect, but it is my impression that the very release of Mason’s defense of Groupon in a missive sent out to thousands of staffers — Hey, Henry, how is it that you didn’t get the memo? — says one clear thing about the sentiment of the company’s leadership.

And that is: They could not be more pleased at finally having their say and they couldn’t care less about anything other than being able to strike a blow against the withering attacks.

There are several reasons for this, according to many sources I spoke with this week about the fallout from the email, most of which center around the impact of the negative press on employee morale and the ability to attract new talent.

“It’s made it very difficult for those working at Groupon,” said one source. “But, worse, is how much our reputation is getting burned in the eyes of young engineers we need to recruit.”

What management at the company does not seem to be as worried about, said sources, is investor disinterest when it comes time to hawk and price the public offering.

While the general Wall Street turbulence might spell a lower valuation, sources said Groupon’s execs and board expect to be oversubscribed when it finally gets out on the market.

That’s why Mason — along with some detailed defenses of Groupon’s most controversial issues — tossed off gems like this one:

“For now we must patiently and silently endure a bit more public criticism as we prepare to birth this IPO baby — a breed for which there are no epidurals.”

Since I do happen to know about birthing babies (and Mason decidedly does not): Ouchie!

We’ll see soon enough exactly who will be feeling that pain.

Until then, here’s the classic didn’t-you-get-the-memo movie clip from the hilarious “Office Space”:

Facing a barrage of negative press about its upcoming IPO, Groupon CEO and co-founder Andrew Mason took up a pen to counter critics of the social buying service.

Especially under scrutiny has been the Chicago-based Groupon’s accounting of its finances — along with worries that its torrid growth is slowing — both of which Mason addressed in detail in a pugnacious email memo to his thousands of employees.

Specifically referencing a recent article speculating that the daily deals site was running out of money, Mason said, in part:

“While we’ve bitten our tongues and allowed insane accusations (like in the article above) to go unchallenged publicly, it’s important to me that you have the context necessary to brush this stuff off.”

Mason also took on the controversial ACSOI — or adjusted consolidated segment operating income — metric that Groupon used in its initial filing and later stepped back from.

“The reason we didn’t realize everyone in the world would hate ACSOI (no, it’s not the same reason we didn’t realize everyone in the world would hate our Superbowl ad), is that we think it actually does a pretty good job at describing our marketing expenses in a steady state — we just didn’t realize there would be so many skeptics,” wrote Mason.

Mason also took some aim at competitors, such as LivingSocial and Yelp, in the email.

As for the public offering, which is expected next month:

“If there’s a silver lining, it’s that we’re almost on the other side, and the negativity leaves us well-positioned to exceed expectations with an IPO baby that, having seen the ultrasound, I can promise you is not one of those uglies.”

Then again, that is exactly what a dad-to-be would say about his baby, whatever it looked like.

Mason, when asked about the memo, declined to comment.

There is a lot more than that, so here’s Mason’s full email for all you pencil pushers to peruse:

Dear Groupon,

This weekend, I did a Google News search on our company — my first in awhile. The first story that popped up was called The Fall of Groupon: Is the Daily Deals Site Running Out of Cash? I laughed when I read the headline (in the car by myself, weirdly). First — with this article, the degree to which we’re getting the shit kicked out of us in the press had finally crossed the threshold from “annoying” to “hilarious.” Second, I was struck by the irony — I had just finished a board meeting last Wednesday saying this to myself: I’ve never been more confident and excited about the future of our business.

I realize that this sounds like the kind of thing that CEOs say when they’re trying to pep people up. First of all — I’m all about not pepping people up. If you don’t believe me, just ask my fiancée, Jenny “why don’t you ever say anything nice about me” Gillespie. Want another example? Look at the magazine covers in our lobby, which are there to make you sad by reminding you of the impermanence of success.

I’m going to spend the rest of this email explaining why I’m so excited. You need some ammo to argue back against your blog-reading “friends” (silently argue in your mind, that is — you can’t actually say any of this yet), and I’ve been told that the “what have you ever done with your life that’s so great?” rebuttal isn’t working as well for you guys as it has for me.

While we’ve bitten our tongues and allowed insane accusations (like in the article above) to go unchallenged publicly, it’s important to me that you have the context necessary to brush this stuff off.

I’ll summarize my excitement with four points: 1) Growth in our core business is strong 2) Our investments in the future — businesses like Getaways & NOW — look great, 3) We are pulling away from competition, and 4) We’ve built a great team that I would pit against anyone. In other words, all the stuff that one would want to look good? It looks good.

Many of the long-term unknowns of our business are becoming known, and we like the answers. I will now elaborate in a level of financial detail that will give Jason Child a stomach ulcer.

1. GROWTH IN THE CORE BUSINESS

Thanks to a tremendous effort by our sales team, August in the U.S. is shaping up to be a pivotal month. It appears that will revenues grow by about 12% over last month (which is a lot), while we cut our marketing expenses by 20% in the same period.

Beyond their obvious goodness, these numbers are important because they answer one of the main criticisms thrown at us in the past few months, relating to a metric we put in the S-1 called ACSOI (adjusted consolidated segment operating income) to help people understand how we think about marketing expenses. The reason everyone in the world seems to hate ACSOI is that it makes us look magically profitable by subtracting a bunch of our customer acquisition marketing costs from our expenses. The reason we didn’t realize everyone in the world would hate ACSOI (no, it’s not the same reason we didn’t realize everyone in the world would hate our Superbowl ad), is that we think it actually does a pretty good job at describing our marketing expenses in a steady state –we just didn’t realize there would be so many skeptics. I think it’s worth going deep on this one more time — brace yourself.

Our internal forecast shows two different types of marketing: what I’ll call “normal marketing” — which is NOT excluded from ACSOI — and “customer acquisition marketing,” which is. The way Groupon spends on marketing is unique in three ways:

1. We are currently spending more than just about any company ever on marketing — in Q2, we spent nearly 20% of our net revenue on marketing, while a typical company spends less than 5%. Why do we spend so much? The simple answer is “because it works.” But thats only part of what makes our situation special.

2. Our marketing — at least the customer acquisition marketing that we remove from ACSOI — is designed to add people to our own long-term marketing channel — our daily email list. Once we have a customer’s email, we can continually market to them at no additional cost. Compare this to Johnson and Johnson, McDonald’s, or most other companies. If I’m a Johnson, and I’m trying to sell you a box of Band Aids, I have to keep spending money on commercials and magazine ads and stuff to remind you about how sweet Band Aids are, even after you’ve bought your first box. With Groupon, we just spend money one time to get you on our email list, and then every day we email you a reminder of the sweetness of our metaphorical Band Aid. There is no cost of reacquisition — that’s unusual (and we created ACSOI to point that out). If Johnson wanted to follow the Groupon strategy, he would have to start a free daily newspaper about bandages and then run Band Aid ads in it every day.

3. Eventually, we’ll ramp down marketing just as fast as we ramped it up, reducing the customer acquisition part of our marketing expenses (the piece that we remove in ACSOI) to nominal levels. We are spending a ton now because we’re acquiring as many subscribers as we can as quickly as we can. We aren’t paying attention to marketing budget (just marketing ROI) in the way a normal company would, because we know that even if we wanted to continue to spend at these levels, we would eventually run out of new subscribers to acquire. So our customer acquisition spend drops severely to reflect the fact that eventually we’ll run out of people we can add to our email list. We view this internally as a very large one-time expense and then our job forever after will be to continually convert these subscribers into customers and to make sure our customers keep buying from us. Ongoing, the normal marketing dollars we spend are not something we would remove from our internal calculation of ACSOI.

I tried my best to explain this simply, but it’s not lost on me that if you actually understood this, you probably had to read it three times. It’s not easy stuff. It’s much easier to assume that we’re goons. So people can be forgiven for being suspicious. In fact, feel a little bad about how downhearted the critics will be when we don’t turn out to be a Ponzi scheme — those are good impulses for journalists to have, and I hope our non-evil ways don’t destroy their spirits.

Anyway, there’s a reason that I just went on about ACSOI. One of the questions that skeptics ask is, “when you ramp down marketing, won’t revenues stop growing as well? Aren’t you just buying growth?” Over the past several months we’ve been consistently reducing our marketing spend and yet revenues are still increasing at a significant pace. In Q1 of this year, marketing represented 32.3% of our net revenues. By the end of Q2 it had fallen to 19.4%. And it has continued to fall over the past several months all because we’ve been investing in our own long-term marketing channel — our email list.

Internationally we see the same trends — marketing is down, but revenues are up — every country is either losing less or making more. Even in young markets like Korea, where we’re still making massive investments, we’re seeing unprecedented growth. We started building our Korean team this January, despite the presence of two competitors that were larger than any we’d previously battled from behind. Thanks to the brilliant execution of the Korean team, we are set to be the market leader within months. We’ve never had a country grow as fast as Korea!

What about our joint-venture with Tencent in China? Did you read the article that Gaopeng’s CEO has kidnapped the first born children of all our employees and is putting them to work building a laser beam he’ll use to slice the moon in half? It turns out that that one isn’t true either. China is definitely a different market, but every month we inch closer to profitability. As has been our strategy in launching other countries — Germany, France, and the UK, included — our China growth strategy was to hire quickly and manage out the bottom performers. So far, that strategy has improved our competitive position in China from #3,000 to #8. Will we one day reach the dominant status we enjoy in most (come on, Switzerland!) other countries? It’s too soon to tell, but there’s no question in my mind that we’re building a business that will be around for the long haul.

2. NEW BUSINESS LINES ARE BOOMING

Travel and Product are enormous opportunities. After only a few months, they’re already making up 20% of revenue in some countries. We sold $2M worth of mattresses in the UK — in one day! Groupon Getaways will do $10M in its first calendar month — which you might think is awesome, but we’re actually disappointed with those results because we know how much better we’ll be doing soon.

While there’s still a ton of work to do, Groupon Now! continues to see weekly double digit growth. The model works and I believe it will play a major part in the future of our global business as more merchants and customers join the marketplace.

3. WE ARE PULLING AWAY FROM COMPETITION

If there’s a question I’ve received from Groupon skeptics more than any other, it’s, “how will you fend off the competition — especially massive companies like Google and Facebook?” I could give a dozen reasons to bet on Groupon, but it’s impossible to predict the future or the actions of others. Well, now the sleeping giants have woken up — and the numbers are showing that what was proven true with literally thousands of other competitors is just as true with the incumbents of the Internet: it’s kind of hard to build a Groupon. And since anyone with an Internet connection can track the performance of our competitors, I can be more specific:

Google Offers is small and not growing. In the three markets where we compete, we are 450% of their size.

Yelp is small and not growing. In the 15 markets where we compete, our daily deals are 500% of their size.

Living Social’s U.S. local business is about 1/3rd our size in revenue (and smaller in GP) and has shrunk relative to us in the last several months. This, in part, appears to be driving them toward short-sighted tactics to buy revenue, like buying gift certificates from national retailers at full price and then paying out of their own pocket to give the appearance of a 50% off deal. Our marketing team has tested this tactic enough to know that it’s generally a bad idea, and not a profitable form of customer acquisition.

Facebook sales are harder to track, but are even less significant at present.

My point is not that our competitors will fail — some may actually develop sustainable businesses, or even grow — after all, local commerce is an enormous market. The real point is that our business is a lot harder to build than people realize and our scale creates competitive advantages that even the largest technology companies are having trouble penetrating. And with the launch of NOW, I suspect our competition will have an even harder time in light of the natural barriers to entry that are needed to build a real-time local deals marketplace.

4. OUR TEAM

This is the fluffiest of the four points, but maybe the most important — we’ve built a global team of hungry entrepreneurial operators and seasoned executives that rivals any team I know of. Almost every day, I find myself in a scenario where I silently think, “I can’t believe I got this person to work for me — that failure of judgement is perhaps their single flaw.”

I point out the team because while today the business is strong and it appears we must endure success for awhile longer (despite its impermanence), we will inevitably be challenged with issues we didn’t predict — and when that happens, the quality of our team will be a deciding factor in our ultimate long-term success.

FINAL THOUGHTS

I wrote this email because when I read some of the press this weekend, I realized a rational person could read this stuff and wrongly conclude that we’re in trouble. The irony is hopefully clear: We’ve never been stronger.

And while we’ve refrained from defending ourselves publicly, you’ve continued to create our best defense, with every department innovating new practices that are taking our business to the next level. Thanks for staying tough, determined, and agile throughout this process. For now we must patiently and silently endure a bit more public criticism as we prepare to birth this IPO baby — a breed for which there are no epidurals. If there’s a silver lining, it’s that we’re almost on the other side, and the negativity leaves us well-positioned to exceed expectations with an IPO baby that, having seen the ultrasound, I can promise you is not one of those uglies.

I’ve been as candid as possible — hope this sheds some light on things. Reply with your questions if anything remains unclear. Amidst all this, I hope you remember what we’re doing here — we are making history together. I guess you don’t get to build something that reshapes the local commerce ecosytem without getting a few bruises. I’m so proud of the work we’re doing, and I feel extraordinarily lucky to work on what I think is the best thing that’s happened to small businesses since the telephone We’ve invented something that is catalyzing millions of dollars of local commerce every single day in 45 countries and fills the lives of millions of customers with unforgettable experiences — it’s pretty remarkable.

Looking forward to getting this behind us!

Andrew

P.S.: I almost forgot to address the nonsense about us running out of money in the article above. If you apply the same logic used in the article, you’d have concluded long ago that companies like Amazon and Wal-Mart were running out of cash too. Both have often had payables far in excess of their cash. Finance geeks call this a working capital deficit. It’s normal, manageable and a lot of folks actually believe it’s good thing and would kill to get paid from their customers long before they have to pay their suppliers. We are generating cash, not losing it — we generated $25M in cash last quarter alone, adding to the $200M we had before. In other words, we’re doing the opposite of running out of money.

Speaking of “it looks good,” here is Conan O’Brien with a Tourette’s version of Mason’s new catchphrase:

Let’s face it: Everyone in Silicon Valley — one way or another — fashions themselves as the next Steve Jobs.

And why not? Both the professional and even personal story of the legendary Apple CEO — which will be chronicled in November in a major book — are the stuff of tech legend and envy: Iconic, in charge, decisive, elegant, innovative, phoenix-like and visionary.

And, of course, more than just a little bit terrifying.

So why not Larry Page, too, and why not now?

One issue: By temperament and action — by which I mean genetically hyper-competitive and hammer-time aggressive — he’s been more like Microsoft’s Bill Gates, who has been the Yin to Jobs’ Yang in their deeply interconnected careers over the last decades.

As I wrote before Page took over again as Google’s CEO earlier this year:

After our first interview in 2001, my notes on the encounter had this one line underlined and in all caps:

LARRY PAGE=BILL GATES.

It was not meant as an insult, but I can tell you I never wrote such a note about Page’s co-founder, the jokey and affable Sergey Brin.

Even then, Gates had a fearsome reputation as a manically competitive exec, a cutting manner to those not as smart as he clearly is and a reputation as a very tough and often eviscerating boss. (And all that was also my experience whenever I was interviewing him.)

While much wonkier, friendlier and more of a sensitive new-aged male, Page, it seemed to me, had the exact same obvious drive and aggression as Gates.

The latest incarnation of that has been Page’s move — bold for now and we’ll-see later — to buy Motorola Mobility for $12.5 billion, which Google announced yesterday.

By all accounts, Page was the key driver of the deal inside Google, where he now reigns firmly.

Although neither Gates nor Jobs has used acquisitions much as a key weapon in their arsenals, the size and scope of the deal is pure Gates: A focused, overwhelming and competitor-scaring display of might that speaks of industry dominance and play-to-destroy aspirations, masking what is also very reactive.

If Page’s doubling down on mobile reminds you a bit of Gates’s “Internet Tidal Wave” memorandum in 1995, that’s because the move-now tone is the same.

And, also, in that it is more than just a little bit sneaky. Case in point: Google’s yammering on about the importance of Motorola’s patents in the deal. While the patent love is true and an important element, bolstering Google’s own weak portfolio, it’s also a bit of a feint by the search giant, which can simply never come out and say what it is actually up to.

Which is to be the dominant and overwhelming player in the mobile market that Google sees as critical to its future.

“The company obviously wants everyone to focus on the patents, but its ambitions are so much larger in mobile,” said one person close to the situation. “So it underplays as it overplays.”

Indeed, in the time I covered Google, it has always been my experience when the search giant insists stringently on one thing, Page and others are playing a more complex version of “Star Trek” three-dimensional chess.

As the New York Times’ DealBook noted correctly:

If there’s any question about Google’s motivation to own a handset maker rather than just a portfolio of patents, consider this: InterDigital, a licensing company that owns some 8,000 wireless patents and has another 10,000 patent applications being processed, has been up for auction. Many industry insiders were sure that if Google were serious about acquiring a portfolio of patents, InterDigital would be its target. The company’s market value is only about $3 billion and it doesn’t come with all the baggage of Motorola’s handset business.

That’s exactly right, because Page’s ambition is about Google playing a big part in the mobile market — which is humanity’s next critical platform in computing — for its interlocked ecosystem of Google products — from its flagship search to social networking via Google+ to Gmail to its latest Google Wallet initiative to Google Maps to Google Voice.

In other words, it’s a Google world and we all just live in it.

At the heart of it is a desire to make and completely control the object at the center of the virtuous circle: The mobile device, whether it be a smartphone, tablet or whatever doodad you might wear around your neck.

In fact, as I also remember from Google’s earliest days, Page did sport a lot of such contraptions back then, such as a communicator of some sort he once joyfully showed off to me that allowed him to reach Brin quickly. Later, it was a kind of pollution sensor that took its place.

My recollection from that time was that Page adored such objects, visibly inspired by the idea of digital devices that delivered a myriad of helpful and smart services to users as they moved around the world.

You know, like an Apple iPhone, the ground-breaking technical achievement that Jobs rendered unto the world less than a decade ago, changing everything.

With Android and Page’s firm backing, Google quickly and smartly jumped partway into that market with its powerful and fast-growing mobile operating system.

Now, like Jobs, I have no doubt Page wants to own and control the whole value chain to solidify what Google started several years ago and which is its best hope to vault into the next era of computing.

It’s a leap that Gates and Microsoft largely failed at, not for lack of trying — something else Page has to have taken note of.

So, perhaps by making things — maybe even beautiful things like Jobs — Page will transform himself from a Gates into a Jobs.

Or, more likely, a little bit of both.

Until that reckoning, here is a terrific video of Spock playing 3D chess with Captain James T. Kirk — and, yes, he does look freakishly like Page here:

Please see this disclosure related to me and Google.

Related posts

• Google: We’re Spending $12.5 Billion on Motorola to ‘Protect’ Android
• Motoogle: BOOM! The Mobile Business Just Got Completely Blown Up
• Google’s Motorola Deal Will Spur Antitrust Regulators to Action
• Watch Google Android Kingpin — and Motorola Acquirer — Andy Rubin Unplugged (Video)
• Defense Spending: Google Arms Itself With Moto Patents
• Is Google’s Motorola Deal the Break That Windows Phone Needed?
• Should Google Keep Motorola’s Patents and Sell Off the Hardware Business?
• Motorola Could Get Google Closer to Your Living Room — If the Cable Guys Play Along
• U.S. Carriers Silent on Motoroogle, but France Telecom Gives It a Thumbs Up
• Google-Motorola Deal Includes $2.5 Billion Reverse Termination Fee
• Google Can’t Say Hello To Hulu Now. (Can It?)
• More Google news
• More Android news
• More Motorola Mobility news

Groupon sent out emails to its users this weekend, about changes it has made to its privacy statement and terms of use.

Among the most notable changes is more information about the Chicago-based social buying start-up’s collection and use of mobile location information.

Said Groupon:

“In short, if you use a Groupon mobile app and you allow sharing through your device, Groupon may collect geo-location information from the device and use it for marketing deals to you (and for other purposes listed in the “How Groupon Uses Personal Information” section of the Updated Privacy Statement).”

In other words, if you let them, in order to improve the experience and make the Groupon Now app more useful, you’re being tracked.

This, of course, has been a dicey issue of late, most recently related to Apple and Google smartphones and what information they collect and retain.

In addition, with a pending IPO, Groupon is under all kinds of scrutiny and any big changes will be closely studied.

In addition, in its email to customers (see below in its entirety), the company said that it had broadened the definition of personal information to include your interests and habits and also that it may share that personal information with partners in new offering areas, such as travel deals with Expedia.

Groupon said it was also trying to improve readability of its consumer information and give greater transparency to its customers.

Here is the whole Groupon memo about the changes:

Wondering about Changes to the Groupon Privacy Statement?

We want to tell you a little more about some material changes we just made to the July 22, 2010 version of the Groupon Privacy Statement (the “Old Privacy Statement”) to create the new Groupon Privacy Statement (the “Updated Privacy Statement”).

In general, all of the changes to the Updated Privacy Statement were made to improve readability, provide greater transparency about our information handling practices, address some new types of relationships Groupon is forging and new technologies Groupon is using or may use, and to let you know about the privacy choices you have. Read on.

* Groupon continues to be a proud member of the TRUSTe Privacy Program. The Updated Privacy Statement contains a reference to the most current version of the TRUSTe Program Rules and includes some additional statements required by those Program Rules. As a TRUSTe Privacy Seal holder, Groupon is committed to complying with the Program Rules as applicable to its online privacy program.

* The Updated Privacy Statement replaces the phrase “Personally Identifiable Information” with “Personal Information” to improve readability and accuracy. (More on this below.)

* The Updated Privacy Statement clarifies that Personal Information is any information that could be used to identify, locate or contact an individual. This definition is broader than the definition in the Old Privacy Statement, which limited the concept of personally identifiable information to identification information in the context of certain defined identification activities. (Whew!) The broader definition in the Updated Privacy Statement reflects our dedication to protecting privacy in all areas of our business.

* The Updated Privacy Statement includes a definition of Personal Information and explains the types of Personal Information collected, used and disclosed by Groupon, namely “Contact Information,” “Relationship Information,” “Transaction Information,” “Financial Account Information,” and “Mobile Location Information.” These definitions provide more meaningful definition about the types of information we collect and how we classify information internally.

* The Updated Privacy Statement has shortened the section that goes on about how we use and disclose non-identifiable information. This change was made to improve readability so we could focus more on talking about what we do with Personal Information.

* The Updated Privacy Statement contains information on Groupon’s collection and use of Mobile Location Information. In short, if you use a Groupon mobile app and you allow sharing through your device, Groupon may collect geo-location information from the device and use it for marketing deals to you (and for other purposes listed in the “How Groupon Uses Personal Information” section of the Updated Privacy Statement).

* The Updated Privacy Statement presents Groupon’s disclosures of Personal Information in a more detailed and transparent fashion. The new “When and Why Groupon Discloses Personal Information” section of the Updated Privacy Statement details the circumstances when Personal Information is shared with third parties in a comprehensive, bulleted-list format. This section reinforces Groupon’s commitment to protect privacy by generally limiting disclosures of Personal Information to our affiliates and services providers and to those merchants and business partners with whom our users interact.

* The Updated Privacy Statement omits the section in the Old Privacy Statement regarding disclosures of Personal Information to Google for remarketing purposes. Groupon does not provide Personal Information to Google for remarketing.

The Old Privacy Statement’s section on “Data Tracking” has been replaced with an expanded section on “Cookies and Related Technologies” to provide greater transparency around data collection technologies. This section contains information about all of the ways that we collect information using automated technologies, including cookies, pixel tags, web beacons, browser analysis tools, and web logs. The section is designed to educate readers about the types of data collected by each technology as well as how the data is used by Groupon. The Updated Privacy Statement clarifies that if automatically-collected data is associated with Personal Information, it is protected by the Updated Privacy Statement. This section also provides information about third party advertising relationships in a more readable form and includes a new paragraph regarding our relationship with Omniture.

* The Updated Privacy Statement contains an expanded section on user choice. The “Your Choices” section in the Updated Privacy Statement provides readers with information on many different types of privacy choices that they can make, along with instructions for exercising the choice. This section also consolidates information on choices that was distributed throughout the Old Privacy Statement and contains a new link to the TRUSTe preferences page.

* The Updated Privacy Statement’s section on “Security of Personal Information” has been streamlined to more-simply state our commitment to maintaining a reasonable information security program with expected administrative, technical and physical controls.

* The Old Privacy Statement’s section “Updating and Correcting Personal Information” has been replaced with a new section “Accessing and Correcting Personal Information.” This section has been revised to improve readability and clarify the processes by which users can access, update and delete their Personal Information. This section of the Updated Privacy Statement also contains a new paragraph regarding data retention. This paragraph was added for clarity and to comply with the TRUSTe Program Rules.

* The Updated Privacy Statement contains a new section giving “Notice to Residents of Countries Outside of the United States of America.” This section educates international users about the fact that Groupon is based in the U.S. so Personal Information may be transferred to the U.S. for processing.

* The “Miscellaneous Privacy Issues” section in the Old Privacy Statement has been deleted and the content it contains has been included in more appropriate, descriptive sections elsewhere in the policy. Also, we omitted the section discussing children’s information because Groupon is not designed for children and the Groupon deals are not offered to individuals under the age of majority in their states of residence. See our Terms of Use.

* The Updated Privacy Statement introduces a new contact mechanism for privacy-related inquiries: privacy@groupon.com. While general customer service questions should still be directed to support@groupon.com, the new address provides a way for us to respond to questions that our users have specifically about the privacy of their Personal Information.

And here is the email sent to users, titled “Updates to Privacy Statement and Terms of Use”:

We wanted to let you know that we’ve updated both our Privacy Statement and our Terms of Use. These new terms, which affect all Groupon users, accommodate our new products and services that allow us to offer you more relevant deals.

If you don’t feel like wading through long legal documents, here’s a summary of the notable changes, in plain English:

We’ve clarified that Groupon Now! and our other mobile apps may collect geo-location data. This lets us present you offers that are close by. See Sections 1 and 5 of the Privacy Statement.

We’ve broadened the definition of “personal information” to include your interests and habits, and provided additional details about how we collect and use your information. We’ve done this so that we can better understand what types of offers you’ll find valuable. See Section 1 of the Privacy Statement.

You may know that we’ve started working with partners to offer Groupon users new deal categories — for example, travel deals with Expedia. Our new privacy statement explains that we may share your personal information with these partners if you subscribe to special communications or buy deals in these new deal categories. See Section 4 of the Privacy Statement.

We’ve updated our Terms of Use to help you understand the expiration policies for different vouchers, including Groupon NOW! vouchers. This explains, for example, that if you don’t use a Groupon NOW! voucher within 30 days we’ll refund the purchase amount. See Section 7 of the Terms of Use.

We also clarified our expectations to ensure that our customers and visitors use the services on our website in a way that keeps the experience good for everyone. For example, we’ve prohibited abusive practices like opening multiple accounts, submitting false information and other practices that we think detract from everyone’s experience with us. See Section 5 of the Terms of Use.

With its annual meeting this coming Thursday, you’d think Yahoo CEO Carol Bartz would be taking a rest.

Not so!

She has been a regular Carmen Sandiego, in fact, jetting to Yahoo hotspots around the globe from Dubai to Milan to New York and then back to Yahoo’s Sunnyvale, Calif., HQ.

As do Yahoos, I get most of the Friday emails she sends out, but I usually don’t bother to post them.

That said, I liked the can-do tone of this one, shades of Bartz early in her term, even in the face of a stock price that’s dropped almost eight percent this month to close at $14.69 on Friday.

(To be fair, the shares of Google are down by a little more in the same time, although its CEO Larry Page seems to prefer to remain holed up in his digital cave in Mountain View and lick his stock wounds.)

No matter, as Bartz writes, it’s nothing a little retail therapy can’t fix!

I myself am off on an international biking vacation in Ireland next week, so while I am gone, please enjoy Carol’s letter to Yahoos:

Last week was a crazy one -– Dubai and Milan in five days! You may not know it, but the Middle East and Italy are two of our hottest markets in the EMEA region (and I do mean hot — it was 114 Fahrenheit and very humid in Dubai — I thought I was going to melt!).

First on the itinerary was Dubai, where I met with government officials, advertisers, the media, and our awesome Yahoos there.

I kicked things off Monday with the Deputy Ruler of Dubai, Shaikh Maktoum Bin Mohammed Bin Rashid Al-Maktoum. Turns out he is a BIG Yahoo! fan. He told me that he’s on our sites every day to check the latest news and sports headlines. It makes sense — we’re huge in the Middle East and North Africa. Since we acquired Maktoob a year and a half ago, we’ve grown from 30 million to 53 million users. That’s impressive in a region with more than 70 million people online today.

We’re tops in entertainment with omg! Arabic, and with our women’s lifestyle site, Helwa. And we’re a strong #2 in News, thanks in part to our new Arabic homepage that launched six months ago. Already, it’s our fourth most popular homepage in the world — right behind the U.S., India and Taiwan. Meanwhile, Yahoo! is #1 in the Middle East and North Africa for display advertising with 40% market share.

Then on Wednesday it was off to Milan, where I visited with advertisers and our passionate Yahoos there. (I love that our Italian headquarters also happens to be located in one of the fashion capitals of the world — so convenient! An hour of retail therapy goes a long way).

We are winning it Italy. In a business review, our folks called themselves the Yahoo! “Italian Racing Team,” and I believe it. They’re firing on all cylinders. The country boasts some of the highest engagement numbers for us in the EU. We reach 66% of the online population in Italy. We’re top three in seven content categories, and #1 in four of them: Mail, News, Answers and Flickr. Plus, these #1 sites are growing faster than the market. And on the ad side, May was a record month for our display advertising in Italy — we’re taking share while growing revenue.

Throughout my trip to Italy and the Middle East, one thing came through loud and clear: Our local teams are able to execute and grow user engagement more quickly than ever before. This is thanks, in large part, to the great work of our Products org.

Take, for instance, our new Yahoo! Publishing Platform (aka LEGO). Our editors have put it to good use on our Italian Movies site. We’ve seen a 90% increase in page views, and a 60% increase in users. And that’s just in the first three weeks! This is exactly what we’ve been working so hard on for the past two years. We’ve completely re-architected our infrastructure, and it’s incredibly satisfying to see it pay off in so many parts of the world.

After all that fun, I headed back across the Atlantic and spent two good, solid days covering a lot of business in the Big Apple — press, investors, agencies and Yahoo! Sales leaders. Then it was back here to Sunnyvale for CEO staff meetings and a great “Coffee with Carol” with 30+ Yahoos.

I’m off to have a good weekend, hope you do too — especially you Dads on Father’s Day!

Carol

According to an internal memo from Juniper Networks, which you can see below, one of its top tech execs, David Yen (pictured here), is departing immediately.

Sources said Yen is headed to Cisco to run its servers business, but the networking giant has not returned a request for comment.

Yen had most recently been EVP and GM of Juniper’s fabric and switching technologies unit. He joined Juniper in 2008 as EVP of emerging technologies.

But Yen was better known for his previous 20-year stint at Sun Microsystems. His last job there was running its chip division.

The impetus for Yen’s departure might have been the formation of the Platform Systems Group, run by Stefan Dyckerhoff, which is prominently mentioned in the memo from Juniper CEO Kevin Johnson. Dyckerhoff was elevated to the job in late January.

Sources said Yen did not get that job and was unhappy with the move.

But read into it yourself:

Team Juniper:

In February, we announced the evolution of our business groups to better position us to focus on two core business models: Systems and Software.

A key element of that strategy was the formation of the Platform Systems Group (PSG) under the leadership of Stefan Dyckerhoff. The mission of PSG is to optimize systems and silicon development across the full range of Junos-based platforms to accelerate our growth.

As part of the next phase of PSG’s growth, R.K. Anand, who leads QFabric development and our Data Center Business Unit (DCBU) and Alex Gray, who leads our Campus and Branch Business Unit (CBBU), will join PSG and report directly to Stefan. This move positions us to drive a fully integrated approach to our end-to-end systems strategy, as we continue to leverage the synergies across our breakthrough innovations in the core, the edge, the data center, and the campus and branch environment. Under Stefan’s leadership, PSG is now positioned to drive the go-to-market focus we have around domain-focused solutions that incorporate systems products from across PSG.

As part of this transition, David Yen is leaving Juniper effective immediately. David has a desire to return to his roots in servers that he gained during his nearly 20-year career at Sun Microsystems. We appreciate David’s contributions.

We are successfully accelerating momentum and adoption of our systems offerings. The response to both our QFabric data center architecture and to the Converged Supercore–two disruptive innovations unveiled in the quarter–has been overwhelmingly positive. These two offerings represent the best of Juniper innovation in systems, software and silicon.

As demonstrated by our strong performance over the past year, we continue to execute on our multi-year growth agenda, driven by our innovation roadmap. The new network is here, and we are delivering on our vision to capture the opportunity before us. Together with our partners, we will transform the economics and experience of networking for our customers.

Thank you for your hard work and dedication. I look forward sharing in Juniper’s continued success with you.

Regards,

Kevin Johnson

Yesterday, AOL’s Huffington Post Media Group got into hot water after the top editor at its Moviefone unit sent a memo to freelancers it was in the midst of firing, offering them an opportunity to “contribute as part of our non-paid blogger system.”

Today, that exec–Moviefone Editor-in-Chief Patricia Chui–was fired by the company, which is in the midst of drastically rejiggering its stable of writers.

Many of those were freelance bloggers under contract to AOL, who are now getting the boot in favor of reallocating staff back to largely paid journalists.

Thus came the controversial email from Chui, which read, in part:

“We will, indeed, be moving away from a freelancer model and toward one relying on full-time staffers. Sometime soon-–this week, I believe–-many of you will be receiving an email informing you that your services as a freelancer will no longer be required. You will be invited to contribute as part of our non-paid blogger system; and though I know that for many of you this will not be an option financially, I strongly encourage you to consider it if you/d like to keep writing for us, because we value all of your voices and input.”

Oh dear. Really, oh dear, especially since the Huffington Post has had its own share of controversies over not paying some bloggers (although it never quite ever offered up a doozie that this letter was).

Sources said Chui was terminated by John Montorio, the HuffPo Media Group’s culture, entertainment and lifestyle editor. Arianna Huffiington is head of all content at AOL, which recently paid $315 million to buy the Huffington Post.

Since she took over, Huffington has tried to stress a return to journalism over more algorithmic content creation. The unloading of its freelance writers was part of that effort.

Thus, Chui’s missteps did not help matters.

But it was not the first time recently that she had made an ill-advised editorial judgment.

Sources said the firing is also due to an incident several weeks ago, in which Chui appeared to defend a marketing employee who sent an email to TechCrunch writer Alexia Tsotsis, asking her to soften a review of “Source Code” due to studio relationship considerations.

AOL bought TechCrunch, a well-known tech news site, last fall. At the time, its CEO Tim Armstrong promised editorial independence and no meddling over advertising concerns.

Instead of taking this minion to task, on Moviefone’s own blog Chui said, in part:

“The reality of our situation is that, as a movies site, we work with movie studios every day, and it is in our best interests to stay on good terms with them. Staying on good terms with studios means that we will relay information if asked. It does not mean that we would ever force a writer or an editor to edit their work for the sake of a studio–or anyone else.”

Even with the last line, it is not exactly a profile in courage, because it was clear violation of the traditional separation of church and state in force at most media organizations.

Typically, editors are supposed to come down on any such communication. That has certainly been my experience in journalism over the years at the Washington Post and Dow Jones–including during its News Corp. ownership. In fact, I have often been shielded from such requests to pass such complaints onto me and only found out much later of advertiser discomfort about my reporting.

At the time, TechCrunch quite clearly called for Chui’s firing and that happened today.

Here is Chui’s full memo to freelancers, as well as the one about TechCrunch, neither of which were apparently cleared with higher-ups:

From: Chui, Patricia
Sent: Tuesday, April 05, 2011 11:26 AM
To: MoviefoneWriters
Subject: Moviefone/Cinematical–Status of Writers

Dear Moviefone/Cinematical Writers,

I know there’s been a lot of uncertainty regarding the future of freelancers and your status as a writer for the site. I personally apologize for the lack of communication, but I’ll tell you what I can.

We will, indeed, be moving away from a freelancer model and toward one relying on full-time staffers. Sometime soon–this week, I believe–many of you will be receiving an email informing you that your services as a freelancer will no longer be required. You will be invited to contribute as part of our non-paid blogger system; and though I know that for many of you this will not be an option financially, I strongly encourage you to consider it if you’d like to keep writing for us, because we value all of your voices and input.

Some of you have indicated interest in applying for full-time writer and editor positions, and the status of those positions are also part of discussions that are ongoing right now. I cannot at this point, however, tell you how many positions there are, or what the exact nature of those positions will be.

Despite the move toward a full-time staff vs. freelancer model, I’m told that there will be room for “exceptions”–for example, in the cases of writers who specialize in certain subjects. Again, what these exceptions are for Moviefone, and what the budget for them would be, is still being discussed.

As for Cinematical, the resignation of Erik Davis is certainly a loss. But I am continuing to have conversations with the editorial leadership here, and I am hopeful that we will still be able to maintain the Cinematical brand and voice going forward. Again, I will share with you any pertinent information as I have it.

In the meantime, those of you who already have assignments, please do continue to work on them unless you hear otherwise. If you’re uncertain of the status of your assignment, check with me. It may take me a while to get back to you, so please be patient–but I will respond.

I am sorry that I don’t have more specific details to give you, but I promise that I’ll keep you as well-informed as I possibly can. Don’t hesitate to reach out if you have questions or concerns.

Best,

patricia

By now you may have read the recent post in TechCrunch regarding that site’s SXSW coverage of the film “Source Code.” A representative from Moviefone, who set up the interview with Summit Entertainment, received some feedback from the studio and passed it along to TechCrunch (our sister site here at AOL). That email has now caused something of a Internet kerfuffle.

Here is the email–reprinted in the post–that was sent to the TechCrunch writer.

Hey Alexia,

Hope you’re having a good time at SxSW and that it’s not been too crazy busy for you!

First wanted to thank you for covering Source Code/attending the party, etc. But also wanted to raise a concern that Summit had about the piece that ran. They felt it was a little snarky and wondered if any of the snark can be toned down? I wasn’t able to view the video interviews but I think their issue is just with some of the text. Let me know if you’re able to take another look at it and make any edits. I know of course that TechCrunch has its own voice and editorial standards, so if you have good reasons not to change anything that’s fine, I just need to get back to Summit with some sort of information. Let me know.

Thanks!

TechCrunch’s issue with Moviefone is that by sending this email, we, in their words, “asked us to change our post. It’s not just sad, it’s wrong.”

I wanted to take this opportunity to clarify a few things.

1) The person who wrote that email was not acting in an editorial capacity. That person’s job is to act as an intermediary between the studios and editorial–not to dictate content, nor to weigh in on the content of Moviefone or any other AOL site. In fact, the presence of a person with that role is just one means we have of ensuring editorial integrity on Moviefone.

2) This is important: We never told TechCrunch to change the post in any way. A publicist at Summit reached out asking if we could convey the studio’s feedback to TechCrunch. We did so. If the editors had responded that they declined to edit the post–which, naturally, is entirely their call–we simply would have conveyed that information back to Summit.

The reality of our situation is that, as a movies site, we work with movie studios every day, and it is in our best interests to stay on good terms with them. Staying on good terms with studios means that we will relay information if asked. It does not mean that we would ever force a writer or an editor to edit their work for the sake of a studio–or anyone else.

We take editorial integrity seriously at Moviefone, and it’s painful to be depicted as a pawn of the studios when that is emphatically not the case. You may think it unseemly for a studio to request changes in an article; that’s certainly your right. But the accusation of pandering on our part or crossing an editorial line is, to my mind, completely unfair, and I would hope that a reasonable reader would be able to recognize the situation for what it is–overblown and unwarranted.

Patricia Chui
Editor-in-Chief, Moviefone

Cisco’s mea culpa doesn’t have the writerly panache of another recent tech company admission of failures–Nokia CEO Stephen Elop’s “Burning Platform” memo. Chambers, like Elop, isn’t specific about what Cisco will do to right the ship, but it’s clear he’s prepping employees for a significant shake up.

Read the rest of this post on the original site »

Dear Grouponistas,

In the future, as Yahoos so kindly do, please forward all important internal communications directly to BoomTown. It’s easier than me waiting hours to receive a fat pile of them from those who shall not be named.

Just sayin’!

Such as the “God’s Country” email sent out by Groupon CEO Andrew Mason about the departure of its COO and President Rob Solomon after only a year at the social buying phenom.

Solomon’s leaving was reported here earlier today and the email is below in its entirety.

According to sources, the leaving was a combination of issues, including the Solomon family’s desire to move back to Silicon Valley from Chicago–which is referenced in the email below.

But sources said the bigger reason was a growing feeling by Mason and its board that the former Yahoo exec was not the right person to lead the social buying company into its next phase of growth.

Source added that the search for a replacement for Solomon has been going on for some time, as Groupon has also been contemplating an IPO.

“Groupon needs a ‘Sheryl Sandberg’ type to take it to the next level, since the business is so complex,” said one person, referring to the well-regarded COO of Facebook, who joined CEO and Co-founder Mark Zuckerberg at the social networking giant after working in a top operating job at Google.

Here is Mason’s email, which is–as usual–cleverly written, as you will see:

From: Andrew Mason
Date: Tue, Mar 22, 2011 at 6:15 PM
Subject: Rob Solomon/COO
To: International Email List

Hi everyone,

Rob Solomon joined Groupon just over a year ago, doing what he once considered unimaginable and relocating his family from “God’s Country” in Woodside, CA to Chicago, bringing his experience as a seasoned Internet executive to help us turn Groupon into the next great technology company.

Now, Rob is moving on, taking his family back to God’s Country. During Rob’s tenure, Groupon has grown from 1 country to 44, 200 employees to 6,500, and 3 million subscribers to over 70 million–in no small part due to his contribution. I’ve learned an enormous amount from Rob; Groupon wouldn’t be the same without him.

In the coming months as we find and transition to a new COO, Rob will remain in his position…and he will remain a friend and advisor to the company into perpetuity.

Thanks for everything Rob!

Andrew

AOL will begin rolling out its plans to overhaul its panoply of content sites as early as today, a key part of its integration with the Huffington Post, sources familiar with the situation said.

AOL CEO Tim Armstrong will be sending out an internal memo on the topic soon, said sources with knowledge of the moves.

He will outline how the New York-based Internet portal, which paid $315 million to acquire the high-profile news and opinion site, will essentially close down dozens of its dedicated content sites–some being shuttered completely and others integrated with existing Huffington Post sites.

One example of the first is Politics Daily, as has been previously reported; it will no longer exist as a brand. Its staff is being integrated into the Huffington Post’s more robust political offerings.

It goes both ways, though–the Huffington Post’s travel site will be closed in favor of AOL’s stronger offering in that arena.

And still other well-known AOL brands, such as its PopEater celebrity site and its StyleList fashion and beauty site, will keep their names but no longer exist as separate destination sites. PopEater will be integrated into HuffPo’s entertainment and StyleList to its similar site.

[UPDATE: StyleList's status was shifted just this morning--it will remain a standalone brand and AOL's Shelterpop will become StyleList at Home, integrating into StyleList. Plus it will all now be called Stylist--losing the "e" and capped "L."]

The changes are causing some tension within AOL, given it is a drastic shift from relatively recent efforts to expand its portfolio of editorial sites.

In fact, some insiders are calling the recent vetting of which content sites to close and which to keep as “death panels,” a somewhat dicey reference to controversies over the Obama administration’s healthcare plan.

Also on deck for tomorrow will be letters sent out to freelancers about new plans to hire some–though not all–of them. According to several sources, AOL content head Arianna Huffington outlined the plan to editors recently, stressing the need to focus on staff-generated and more journalistically focused content.

One thing that is not happening is the appointment of a new editor-in-chief for AOL’s flagship tech news site, Engadget.

BoomTown reported on the recent departure of Engadget’s top two editors, Editor-in-Chief Josh Topolsky and Managing Editor Nilay Patel.

The news rocketed around the small echo chamber that is the tech blogosphere, which is no surprise since Engadget is one of the largest sites on the Web covering the tech sector.

In the interim, staffer Darren Murph has been appointed managing editor of Engadget. He reports to Joshua Fruhlinger, editorial director for Engadget, Switched and AOL Tech. Brad Hill is the business director for the properties.

Engadget is one of the largest in tech, with 14 million unique visitors a month. Its main competitor is Gawker’s Gizmodo. AOL also owns TechCrunch, another tech news site.

An email to AOL for comment has not yet been returned.

It is definitely a bummer of a day at AOL today, for those employees getting the boot.

Last night, BoomTown broke the news that the layoffs were coming today in both the U.S. and India.

Sources said those being laid off on the AOL staff in the U.S. will be getting four weeks of severance plus one week for each year of service.

It will be paid out every two weeks, instead of a lump sum.

In a memo, AOL said “impacted employees will be notified by 3 PM EST today and we will be scheduling an all-employee call at 5pm EST to answer any questions you may have.”

After all the bad news today, sources at AOL said there will be a series of more forward-leaning announcements about changes to AOL’s editorial offerings, now run by the Huffington Post’s Arianna Huffington.

AOL is making a lot of these drastic changes as its CEO Tim Armstrong seeks to turnaround the long-suffering Internet giant.

Finally, here the actual layoff memo, although I am not sure exactly what a “hyper-local, national and global media company” is:

From: Armstrong, Tim
Sent: Thursday, March 10, 2011 07:16 AM
To: Armstrong, Tim
Subject: AOL’s Next Step

AOLers -

Today is the next critical step on the comeback trail for AOL. We are creating a next generation hyper-local, national and global media company, and every action we’ve taken since AOL became an independent company has taken us further down that path. Our strategy remains clear: create high quality content experiences for consumers, at scale. As the digital landscape quickly evolves, so must our business, and we must continue to transform our organizational structure to one that works for today’s Internet.

Today, we are announcing an organizational structure that will significantly improve AOL’s ability to focus on growth. The structure will also impact areas of our team–making the decision to reduce staff levels is a necessary part of rebalancing our workforce to be competitive in our industry. Affected employees will be notified today and AOL will offer assistance programs–including workspace, counseling, and technology. We ask all of our employees to help impacted employees find career opportunities within our industry.

The structural changes at AOL are possible because of the progress we have made as a team in the last 12 months. The majority of our sites have materially improved their consumer experiences, our advertising business continues to get healthier and more innovative, our video position is strengthening everyday, our local footprint is quickly expanding, we are attracting some of the most talented people in the world to work at AOL, and our technology infrastructure is simpler and more robust. AOL is a global brand and a global opportunity and we are doing the hard work that will once again make the company an industry leader.

There are three important aspects to the structural changes we are making today. The first is the architecture of our brand portfolio. The second is the organizational design of The Huffington Post Media Group. The third is our shift from India being a business process center to India being a consumer products group focused on the APAC market.

New Structure: Investing in our Brand Portfolio

AOL’s brand portfolio has become more focused and stronger over the last year and we will continue to invest in our brands. We are committed to an AOL brand architecture that empowers us to build best-in-class brands that serve valuable audiences with incredible content and great experiences. As you have seen and have access to, AOL’s brands are measured with a consistent set of criteria that will allow us to transparently judge the health of each brand. As we considered adding The Huffington Post, we looked at the combined assets of the two companies and have found creative ways to strengthen our portfolio and will continue the brand refinement process over time. AOL will have four areas of significant brands: Media (Media & Ads–including Local), Publisher Networks (Media & Ads for Publishers), Applications (Communications, Mobile, Commerce), and Subscriptions (Paid Subscribers).

We have a clear path to brand success–which is only turbo-charged with the addition of the Huffington Post to our brand portfolio. We have an AOL brand that enjoys 99% brand awareness and our commitment to reinvigorating the AOL Brand has enabled us to begin to shift brand perception of AOL–including being named as one of the top 50 brands “loved” by consumers at the end of 2010. We will continue to invest in the AOL Brand as well as support best-in-class brands that will allow us to grow our overall audience and reflect our focus on the most valuable audiences–our 80, 80, 80 strategy.

New Structure: Huffington Post Media Group

The addition of the Huffington Post will be a core foundational element in our drive to be a leading digital media and brand advertising company. HuffPost attracts over 27 million people a month–its unique visitors have increased 588% over the last three years, and revenue has increased 400%. The company is leading the way in connecting content with social communities. AOL will be replacing approximately $20 million of loss in our news and finance operation with a high growth company and a team that is pioneering the way the world gets information.

The newly formed Huffington Post Media Group (HPMG) is a vehicle to house and grow our investments in journalism and content in general. The goal of HPMG will be to create compelling, content-driven experiences for users. Consumers, world-class brands, relevant audiences, and innovative brand advertising opportunities are a winning formula for the future of the web and HPMG will have significant resources and distribution to be a leader in our space.

With Arianna’s leadership and vision, HPMG will be fueled by high-quality editorial content, and will give AOL the enhanced ability to deliver a scaled and differentiated array of premium news, analysis, entertainment, information, and community – all integrating our local, national and global content initiatives. As President and Editor-in-Chief, Arianna will lead the content vision. Jon Brod, as HPMG Chief Operating Officer, will be Arianna’s business partner and lead the business strategy for HPMG. We will replicate this model through the vertical content areas and become an editorial-led media organization that allows us to create higher quality content in real time, while better aligning the editorial and business sides of our company.

We are creating Department Editor positions for each of the editorial departments and their partners will be the General Managers (formerly our Mayors), who will continue to serve as CEOs, driving revenue, distribution and overall growth strategy for the departments they support. We will be expanding the advertising programs (like Project Devil) and the distribution opportunities (like mobile and video) through the work of the GMs. GMs will also work to connect the content brands with our central sales force.

The editorial-driven model of The Huffington Post Media Group will also change the way we create our content. Going forward, AOL will invest more heavily in our in-house editorial team and transition away from a reliance on freelance journalists. Journalists are the heart and soul of a media company, and our reporters and editors will be working closely with the tech group to produce compelling and engaging editorial content–including lots of video.

As part of this enhanced focus on quality journalism, we will be making new editorial hires in the HPMG as well as continuing to expand and grow Patch. With the acquisition of The Huffington Post and this renewed focus on editorial creation, we have increased the number of staff dedicated to content creation to over 1200 people and remain a net importer of journalists.

As a result of this new structure, close to 200 people will be leaving the AOL Media and tech groups in the US. These changes, among others, will be necessary as we execute our Media Group’s vision of creating real-time engagement and continuing to build a comprehensive source of compelling news, entertainment, information, opinion, and community. Specific elements of this integration are still being finalized, and we will communicate them to you as soon as we know more.

New Structure: Refocus in India

India is an important consumer and business market for AOL and we have a talented workforce covering many aspects of our business. As Kumar has announced to AOL India, as part of the new organizational structure, we have decided to focus our efforts on the India consumer market and move the business processing functions to scaled partners. India is gaining importance as a consumer market and we are actively working on products for that market and will be ramping up research and product engineering after the restructuring. A small number of project engineering functions will transition to Dulles and Dublin, while India starts to focus on Asia and India related consumer products and revenue.

Back office and support functions will transition to 3rd party partners and many current AOL India employees will transition along with those roles to continue to support core AOL functions with new partner companies. For our business and our scale, it makes business and financial sense to partner with other providers.

Overall, the structural changes in India will impact close to 700 jobs, with approximately 400 transitioning out of the company, and 300 transitioning to outsourcing partners to continue to work on the AOL business. AOL India has been a significant part of AOL, starting with call center outsourcing in 2002 and morphing into a business operations center. The employees of AOL India are talented, energetic, and hard-working – and we will be offering impacted people transition services. I would hope that India becomes a great future consumer market for AOL based on India-first product development.

Today is a day that represents a step toward the future, but also a day where change will cause an impact across our team. AOL remains in the middle of the disruption that the Internet is causing and we are starting to move from being a disrupted brand to a brand that is leading the disruption. The changes we are making are not easy, but they are the right changes for the long-term health of the company, the brand, and for our employees.

Impacted employees will be notified by 3 PM EST today and we will be scheduling an all-employee call at 5pm EST to answer any questions you may have. Please do not hesitate to reach out to me directly -TA

In the wake of the departures of two top ad execs to social buying sites, the hiring of another from AOL and a whole new sales management team in place, it’s got to be time for a reorg at Yahoo!

And so it is.

Below is an internal memo from Yahoo’s head of U.S. ad sales Wayne Powers–who was hired in November–about changes in the Silicon Valley Internet giant’s key advertising unit.

The changes come in time for Yahoo’s global ad sales meeting, taking place in San Antonio, Texas next week.

The theme of this year’s event is “The Race Is On,” sources said, which BoomTown does not exactly grok.

Who is Yahoo racing? Does it have a fast car to do so? And is it an amazing race or just meh?

Sources tell me that, unlike at previous such confabs, there will be no big names speaking, with a focus instead on the basics of sales training and operations.

More interesting: Apparently, there are no phones allowed and violators will get their wrists slapped.

Obviously, you ad sales people will have to leak to me via carrier pigeon.

In all seriousness, it will be an important gathering as Yahoo seeks to revitalize its sales team, which has seen a spate of management changes recently.

Most recently, two longtime sales execs have left–Lee Brown to Groupon and Mitch Spolan to LivingSocial–while former AOLer Mark Ellis joined.

Here’s the rest of the mishegas via the memo:

From: Wayne Powers
To: XXX@yahoo-inc.com
Cc: Carol Bartz
Cc: Ross Levinsohn
Cc: Blake Irving
Cc: Elisa Steele
Cc: Tim Morse
Cc: David Windley
Cc: Rich Jacquet
Cc: Rose Tsou
Cc: Wayne Powers
Cc: Christophe PARCOT
Cc: Susanna Lee
Cc: Linda Lubsen
Cc: May Petry
Cc: Tekeita Lodge
Cc: Zealous Wiley

Subject: Organization Announcement

Sent: Mar 8, 2011 3:01 PM

Team,

As we evolve our best-in-class sales organization, I would like to make two key organizational announcements. I am pleased to announce that Liz Ritzcovan will be joining Yahoo! as vice president of Marketing Solutions, leading our Sales Development organization. I am equally excited to announce the promotion of long time Yahoo!, Andrea Morokutti, to vice president of Sales Operations and Strategy.

Liz was most recently vice president, Corporate Sales and Client Services, Digital at Time, Inc. where she led all media efforts and oversaw strategic digital planning processes in coordination with Time Inc, Amex Publishing and Time Warner Broadcast. Along with her team, she was focused on developing and forging sales and marketing partnerships to ensure broad distribution and effective media planning for Time’s corporate and brand partners.

Liz brings an impressive history increasing profits and expanding client and partner bases for various organizations ranging from entrepreneurial start-ups to leading multi-billion dollar global corporations. Prior to joining Yahoo! she held various leadership positions at Interbrand, CondeNast and Miller Publishing. Her expertise in print, digital, broadcast and emerging media strategy and new advertising models will be a tremendous asset to the organization. Liz has a B.A. from University of New York at Potsdam. Liz will be starting later this month and will be based in New York. She will also be at the sales conference and is looking forward to meeting many of you.

With nearly 11 years under her belt at Yahoo!, Andrea’s most recent role has been vice president of Demand Ops Finance in the Americas Region under Mark Liao. Prior to that, Andrea held various leadership positions within finance, including support of the CMO organization, Mobile and Corporate. With Andrea’s solid expertise in finance and business strategy, this new role was a natural progression for her and we excited to have her join the team. Andrea will continue to be based in Sunnyvale.

Both Liz and Andrea will report directly to me. Frank Weishaupt will continue to lead our North America Region Ad Marketplaces organization. And I’d like to thank him for his leadership of the Sales Development and Operations organizations over the last nine months.

Please join me in welcoming Andrea to the team and Liz to Yahoo!.

On a related note, Mark Ellis started last week and is up and running. He’s hitting the road and spending time meeting clients and Yahoos. Look out for him next week at the sales conference.

I’d like to thank Mitch for his many years of service at Yahoo! and wish him the best of luck in his future endeavors.

Wayne

As AOL CEO Tim Armstrong works to integrate his $315 million purchase of the Huffington Post into the Internet portal, one of its top advertising leaders is departing for a big job at Yahoo.

Mark Ellis will become head of the Silicon Valley Internet giant’s North American field sales, afterhttp://kara.allthingsd.com/wp-admin/my-sites.php serving in a wide variety of jobs at AOL and being a key lieutenant to global ad sales head Jeff Levick.

Previous to AOL, Ellis worked at sports marketing company IMG, at Quokka Sports, a sports Web site and at Time Inc. as publisher of Time Inc. New Media.

While there, he worked with Yahoo’s current U.S. ad sales head Wayne Powers.

While AOL portrayed the move as a well-planned reorganization in an internal memo, the departure of Ellis was a new wrinkle, as Armstrong has been contemplating how to best rejigger its key ad business after the bold acquisition of the news and opinion site run by its famous editor-in-chief Arianna Huffington.

Several sources said Armstrong found out a week ago about Yahoo’s interest in hiring Ellis, whom Yahoo had been pursing Ellis for far longer. Interestingly, he has been involved in the planning for the changes as the deal to buy the Huffington Post wraps up.

Sources said that deal is expected to close as soon as a week.

Previous to the Huffington Post situation, sources at AOL said the New York-based company has been contemplating a variety of changes, including Ellis’ role, in the ad department as its sales have continued to suffer.

Whatever the circumstances, an experienced ad sales exec like Ellis moving to a major AOL competitor is certainly a change.

Here is Levick’s staff memo on the changes in AOL’s ad unit, with the Ellis move buried low and with no mention of Yahoo (natch!):

Team–

One year ago this week, we decided to innovate the future of brand advertising for the digital world. Last night, our work was recognized by the industry in a meaningful and significant way. The race is on for the next phase of advertising on the Internet and we are in that race. We have more to do, but we’re going to do it and do it quickly.

Today, we also wanted to announce a set of changes that will allow us to expand and accelerate our ability to serve our customers on a deeper level. We now have a great suite of products to match our talented team. We also have an expanding base of consumers on some of the best brands on the Internet and that represents a very attractive proposition for our customers. The addition of The Huffington Post adds an incredibly talented team of sales people and journalists to our team and we have the ability to scale all aspects of our business.

I’m very happy to announce that over the next 90 days, we will be integrating The Huffington Post sellers into our regional teams and expanding the roles of three of our star field generals–Tim Richards, Wendy McGregor, and Tim Castelli. Wendy, Tim, and Tim will lead the sales for AOL and Huffington Post Media Group and report directly to me, moving them into a more central role in AOL’s revenue strategies and management.

Jim Norton will continue to lead the Advance Sales team but will also be taking on a new role as the VP of Product Sales, reporting into me. In this role, he will help realize the potential with Mail, AIM, Local, AOL.com and other core product solutions for National and Advance advertisers, serving as a critical ‘linchpin’ that connects our advertiser opportunities with AOL solutions. Christa Zambardino will continue to lead sales efforts for AOL.com and will report to Jim.

Don Kennedy will also report directly to me, taking our focus on the network to new levels and will continue to build out our Network Sales organization, working in close partnership with Dave Jacobs and Rob Luenberger.

Finally, Mark Ellis will be leaving the organization. I can’t thank Mark enough for all he has done for AOL and for the teams during his time here. He has been a great partner to me and I wish him all the best in his future endeavors.

We will continue to keep you updated on the status of the Huffington Post deal as well as any other organizational announcements. Please feel free to reach out to me with any questions.

Best,

Jeff