Tech Head's Exit Leaves Yahoo! in Lurch

The real challenge will be making the many small tweaks to the system to improve the quality of results. Indeed, these "second-order" improvements -- the continuous calibration on the system based on how Web surfers are using it -- has long been pointed out as crucial by Yahoo!'s management. And small refinements are also the reason why Google continues to make the kind of gains it does.

Nazem will also be particularly difficult to replace given his long tenure with the company, and in light of Yahoo!'s complicated technology systems. Rather than the simplest system from the ground up, Yahoo!'s current platform has been stitched together over time and includes the incorporations of major acquisitions like Inktomi and Overture.

The recent launch of Panama, combined with the planned expansion into Europe and Asia, will add another twist. Having someone deeply familiar with all these intricacies is much less risky than having someone learn on the job.

Nazem's departure also will hit Yahoo!'s seemingly always incomplete management team hard. Outside of founders David Filo and Jerry Yang, key players lack a technical background -- despite the increasingly technical bent Yahoo! seems to be taking. Newly hired CFO Blake Jorgensen and Publisher & Advertiser group head Sue Decker hail from Wall Street. CEO Terry Semel, while a hit with advertisers, is said to have first started using email only upon arriving at Yahoo!.