• Business Week, Friday, May 18, 2007 11:30 AM

Yahoo's got a sizable turnaround task on its hand, but it's not about the company's corporate directive this time; it's about rallying the troops. After a sustained period of disappointment on Wall Street, morale at the Sunnyvale, Calif. Web giant is low, and long-time employees are leaving.

Even the good news that CEO Terry Semel had finally hired a new chief financial officer in Blake Jorgensen, the co-founder of the investment bank Thomas Weisel Partners, was construed negatively on Wall Street: Investors sent the stock down 1.7% on fears that Jorgensen's appointment precedes the shedding of assets or even an outright sale.

The fact that the May 4 speculation that Microsoft might buy Yahoo sent the company's shares soaring is symbolic of the overall climate at the Web giant recently. The report says resumes are "flying" to Google and Silicon Valley Web startups in the wake of the uncertainty; employees clearly expect the company to either be sold or undergo drastic changes soon.

The biggest indicator, former employees say, is the long list of those who've been with the company for six years or more who suddenly want out.

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