Microsoft Snags Ex-Yahoo Exec in Search Revamp

Qi Lu
Former Yahoo executive Qi Lu
Photo source: Microsoft

Microsoft, in its continuing push to compete in the critical area of Internet search, tapped on Thursday a former senior Yahoo executive, Qi Lu, to head its online services group.

The software giant, which tried and failed to buy Yahoo (NASDAQ: YHOO) earlier this year, is looking to revamp its online search strategy to better compete with the industry juggernaut, Google.

Microsoft (NASDAQ: MSFT) said recently it does not want to buy Yahoo any more, although it has left open the possibility of a search deal with the company. Lu, who was responsible for development of the Web search and monetization platforms at Yahoo, left the company in August after 10 years.

Internet search is seen as a crucial growth area for Microsoft, as more and more software and services migrate from computer desktops online. Google (NASDAQ: GOOG) has parlayed its dominance as the search engine leader into products that compete directly with Microsoft, such as e-mail and online word processing and spreadsheets.

Sandeep Aggarwal, an analyst with Collins Stewart, noted that Lu is the second high-profile former Yahoo search executive to join Microsoft recently, with the first being Sean Suchter. Microsoft’s plans seem clear, he said.

“Microsoft is recognizing that with their in house talent they can only go so far in the search business … secondly it highlights that if the Microsoft-Yahoo search deal happens, and we believe it is very likely, a knowledge transfer will help Microsoft to better prepare for a future transition.”

Lu will begin work at Microsoft in January and report directly to CEO Steve Ballmer.

Microsoft also said Brian McAndrews, the former CEO of aQuantive, which the company acquired last year for $6 billion, is leaving the company. He was senior vice president of the advertiser and publisher solutions group, which will be overseen by Lu in his new role.

McAndrews, along with Microsoft online services group executives Satya Nadella and Yusuf Mehdi, were all rumored to have been candidates for the job that was given to Lu, Aggarwal said.

Shares of Redmond, Wash.-based Microsoft closed at $19.11, down 76 cents or about 3.8 percent, while shares of Sunnyvale, Calif.-based Yahoo closed down 45 cents or about 3.9 percent at $11.05.

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