It's kind of true, though. Outsourcing production seems to be working well for Yahoo. Delicious and flicker are pretty awesome, and I can't think of a Yahoo in-house app that's at that level.
Plus, I suspect there are inherent problems in any group called "innovation team."
The artists from yHaus were very talented, but their relevance to Yahoo amounted to supercool projections at Brickhouse parties. And that may be all that they were asked to do. Some companies treat innovation as a core part of the business, and others treat it as a P.R. exercise.
"Hmm, looks like we need to cut costs. Let's fire the innovation team."
"But boss, without new innovations, how will we manage to stay ahead of the competition?"
"Silly child, we're Yahoo! We have a bang at the end of our name! We don't need innovation."
"..."
"Plus, we can just buy anything that's innovative. Outsourcing innovation! I should give myself a raise." :scribble, scribble:
"..."
"..."
Wow.