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Yahoo hires McKinsey to mull reorg, as Mayer demands exec pledge to stay

According to several people close to the situation, Yahoo has hired McKinsey & Co. to help the company decide which units to shutter, which to sell and which to invest more in.

The move comes as the company's long-in-the-tooth spinoff of its Alibaba Group asset moves to completion. Sources said that the consulting firm was meeting with top execs to begin the process of figuring out how to organize the Silicon Valley Internet company's core businesses going forward.

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It's all part of an effort by CEO Marissa Mayer to turn around the turnaround she has been attempting for more than three years.

Marissa Mayer
Ruben Sprich | Reuters
Marissa Mayer

In addition to the reflection on what should happen to revive the core, which largely remains an advertising business, Mayer has also over the last month asked her top execs to make three- to five-year commitments to Yahoo. Sources said she told senior staff at meetings in late August and early September that they had to either verbally or in writing make the promise to remain.

That move seems to have backfired a bit, resulting in several major departures recently, including European boss Dawn Airey, marketing and media head Kathy Savitt, development chief Jackie Reses and many others to other jobs. Curiously, Mayer tossed them all under the bus in Yahoo's recent quarterly call, slying suggesting to analysts all the departures had been planned and that her current team was Yahoo's bestest ever.

They weren't and it's not, but why quibble with an attempt at spin in the face of more difficult times ahead?

Mayer may have more of that to do, as sources added those major talent departures are not over. Insiders expect at least two others reporting directly to her to leave soon. (Not counting Mayer's longtime assistant, I would pick communications czar Jeff Bonforte or science & tech head Jay Rossiter to leave the island next, but that's just my guess.)

Mayer recently held an offsite with top Yahoo staffers at a San Francisco hotel, where they got leadership tips from the new HR head and also got to see a number of new initiatives were discussed, including a massive effort called Project Index.

What's that, you ask? Well, according to those who have seen it and heard Mayer talk about it, it's apparently going to be the savior of Yahoo — a one-stop mobile search and "indispensable guide" in the life of a consumer. While it was once under the purview of Bonforte, development is now being led by Yahoo search head (and former Googler) Enrique Muñoz Torres.

While it was supposed to come out this year, sources said Index's launch may be delayed.

Still, Mayer has told many people that Index will be a critical product for Yahoo, orienting the company toward search in a more significant way. That unit is certainly getting more resources, said many sources.

And which part of Yahoo loses those resources, as McKinsey begins its work, remains to be seen.

Yahoo shares are down more than 30 percent this year, as investors worry about its prospects post-Alibaba spin. Up next, I would assume will be the circling of the private equity sharks, who are doubtlessly beginning to look for an opportunity there.

(I am still waiting for Yahoo's slow-moving PR chief — wouldn't you know it, she is staying put! — to get back to me from three years ago, so let's assume no comment from the company.)

By Kara Swisher, Re/code.net.

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