NEW YORK (Reuters) - Shares of Yahoo Inc fell more than 3 percent on Friday as reports of a brain drain raised fresh worries about the future of the Web company after it chose to partner with Google Inc instead of Microsoft Corp.

TechCrunch and other technology blogs on Thursday reported that three executives were leaving Yahoo, including Brad Garlinghouse, known for a 2006 "Peanut Butter Manifesto" memo that called for a radical overhaul of the company.

Yahoo President Sue Decker is considering a reorganization that would centralize Yahoo mail, search and homepage divisions into a global product organization, the Wall Street Journal reported, quoting people familiar with the matter.

"With human capital historically having been one of Yahoo's greatest assets, we see these developments as a material negative," Standard & Poor's information technology analyst Scott Kessler wrote in a research note.

"We think a restructuring is (in) the offing and that morale is likely relatively low," he wrote.

Shares of Yahoo were down 2.7 percent at $22.11 in midmorning trading on the Nasdaq, having lost about 15 percent since the company announced the Google search advertising deal, and said buyout talks with Microsoft have failed.

Yahoo declined to comment on the reports of executive departures, and it was not clear whether a reorganization would be in response to them or the other way around.

Garlinghouse oversaw e-mail, instant messaging and other services. In his famous memo, he said Yahoo was spreading itself too thinly over various opportunities, like a layer of peanut butter. "I hate peanut butter," he wrote.

Vish Makhijani, general manager of Yahoo's Web search business, and Qi Lu, the top engineer for Yahoo's Panama search marketing platform, also were leaving the company, said TechCrunch, which put together a spreadsheet of defections.

Yahoo has rejected a $47.5 billion takeover offer from Microsoft, or $33 per share. It also turned down an alternative deal to sell the software maker its search business.

The Sunnyvale, California company is fighting a proxy battle against activist shareholder Carl Icahn, who has sought to replace Yahoo Chief Executive Jerry Yang and the board. The company's shareholders meeting is scheduled for August 1.

The Wall Street Journal said Decker wanted to improve coordination between product teams and global sales groups, but gave few details. Some reorganization details could be announced next week, it said.

Yahoo said at the beginning of the week that Jeff Weiner, recently executive vice president of the network division, had left to work at venture capital firms.

(Reporting by Tiffany Wu; Editing by Brian Moss)

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