Yahoo! Suffers Two Exec Departures

The revolving door at Yahoo! (YHOO Quote) is spinning quickly this week.

John Costello, who joined the Internet company a year ago as chief global marketing officer, said Friday he was leaving to take the top marketing post at Home Depot (HD Quote).

That makes Costello the second high-level executive hired last year whose departure was disclosed this week. Also exiting, says Yahoo!, will be James Fanella, who joined the company a year ago August as senior vice president for business and enterprise services.

Both were hired to be part of the new management team led by chief executive Terry Semel, who earlier in 2001 replaced longtime CEO Tim Koogle.

Yahoo! has engaged an executive search firm to find a replacement for Costello. Fanella, who will be leaving at the end of October, will be replaced by European enterprise chief Steve Boom, says a Yahoo! spokeswoman.

Investors didn't appear to be interpreting the news as a negative for Yahoo!. On Friday afternoon, the company's shares were trading at $14.94, up 27 cents.

Certainly, the company is enjoying the afterglow of last week's announcement of better-than-expected financial results for the third quarter ended Sept. 30. Yahoo!'s shares have rocketed 50% from their $9.98 close before the numbers were released last Wednesday.

W.R. Hambrecht analyst Derek Brown, who raised his rating on Yahoo! from sell to hold following the earnings announcement, says despite the company's successful quarter, it still faces uncertainty about the success of three key businesses: the Internet access offered in conjunction with SBC Communications (SBC Quote), the HotJobs employment site and the core advertising market. Brown's firm hasn't done banking for Yahoo!.

The source of future growth, says Brown, "is not clear enough in my mind to support the current valuation." On Tuesday of this week, Brown wrote in a note, "We think the stock has come too far, too quick and urge caution at current levels."