Is there anyway to fix it? Can he right the ship?
A good start would be to re-brand their search business. Search is the only way to make a decent buck from online media and having a search brand is the only way to do that well. Right now Yahoo search is anchored to a Yahoo brand which stands for.....really nothing.
But Yahoo knows how to build a strong search brand. They've done it before. In an interesting quirk in history, Yahoo created the #1 brand for internet search years ago when they decided to outsource search to Google. Putting Google's name next to the search box on the web's most trafficked site was the kickstart Google needed to become THE search brand.
So why not have history repeat itself? To do this, Yahoo should spin off its search assets into a newco and brand that new company something/anything other than Yahoo Search. Keep the Yahoo name as far away from it as possible. Also, make sure that whatever name is given to newco, that it is prominently displayed next to the search box every time it shows up on a Yahoo.com page - including, obviously, the search results pages themselves. Powered by....
This is how brands are built - put a unique name on a specific service and have that service and the name become equated. With billions of page views every month, Yahoo is actually uniquely situated to create a brand on their own, without an additional huge marketing spend behind it. Like I said, they did it once before.
While re-branding doesn't cure all their ills, it's a very good start. They still need to make strides from a product standpoint, fortunately for them they start with a product where relevance is actually pretty good. But they still need to differentiate. The Google clone won't overtake Google. Now, we have lots of ideas on how to do that - which we of course aren't at liberty to share :) - and I'm sure Yahoo's search team does too.
The bottom line is that display ads are not going to get Yahoo to where it wants to be. It needs to make a stronger run at search and to do that it needs a singular search brand. Spin out, re-brand, tool up and start marketing (on-site and off). That's what I would do if I was Yahoo.