Yahoo! Inc. Chief Executive Officer Jerry Yang faces an exodus of top managers, challenging his effort to turn around the Internet company after he spurned a $47.5 billion takeover offer from Microsoft Corp.

At least nine officials may have decided to leave, and the possible reorganization of Yahoo’s e-mail, search and homepage units into one global division may prompt even more departures.

Losses amid Yahoo’s ranks, including Jeff Weiner from the networks unit and Qi Lu from the search business, may make it harder for the company to prosper on its own. Billionaire investor Carl Icahn is seeking to oust Yang, whom he accused of botching the Microsoft acquisition.

“It’s going to cause a cave-in from the top down,” Colin Gillis, a Canaccord Adams Inc. analyst in New York, said of the lost top engineering talent. He recommends selling the shares.

Yahoo, owner of the second most popular online search engine, said yesterday that Lu, its senior vice president of search technology, will leave Aug. 31. Sunnyvale, California- based Yahoo agreed last week to allow bigger rival Google Inc. to sell advertisements on some of its search results, a partnership Yang reached after scrapping talks with Microsoft.

Yahoo fell 63 cents to $22.10 at 10:37 a.m. New York time in Nasdaq Stock Market trading. Before today, the shares had dropped 13 percent since Yahoo announced talks with Microsoft had ended.

Read More