Yahoo picks exec from PayPal as CEO after 3 flops
SAN FRANCISCO — Yahoo’s previous turnaround attempts have flopped under three leaders with dramatically different backgrounds: former movie mogul Terry Semel, beloved Yahoo co-founder Jerry Yang and profanity-spewing Silicon Valley veteran Carol Bartz.
Now the struggling Internet company is making yet another unorthodox choice with Wednesday’s announcement that it has lured away Scott Thompson from a lower-profile job running eBay’s thriving PayPal service to step into the pressure-packed position as Yahoo’s fourth CEO in less than five years.
The appointment raised questions among analysts, since Thompson, 54, has no experience in online content and advertising, Yahoo’s chief sources of revenue. The timing of Thompson’s hiring also came as a surprise, given that Yahoo’s board has been considering a sale of all or part of the company since firing Bartz four months ago.
With Thompson’s selection, Yahoo’s board is signaling that it believes the company can still rebound, despite several years of losing ground to Google and Facebook in product innovation and online advertising.
Even so, a sale of Yahoo’s most prized assets — its investments in Yahoo Japan and China’s Alibaba Group — is likely. Softbank Corp., Yahoo Japan’s largest shareholder, and Alibaba Group have proposed buying back most of Yahoo’s holdings in the Asian companies in a deal valued at $17 billion, according to published reports.
Yahoo Chairman Roy Bostock dismissed recent speculation that Yahoo might team up with buyout firms to take the company private.
“It has not been on our radar screen,” he said yesterday. “I think it’s a moot issue from my point of view.”
Thompson’s job will be to revive Yahoo’s revenue growth and repair the company’s fractured relationship with investors fed up with a litany of broken turnaround promises.
Yahoo’s stock has not traded above $20 in more than three years. It dropped 51 cents, or 3 percent, yesterday to close at $15.78.
“There is no shareholder or investor who will be less patient than me,” said Thompson, a Boston native who still has his hometown accent 18 years after moving to California. “We have got to be able to grow this business. There is no question that is priority No. 1.”
Thompson’s predecessors embraced a similar agenda with mostly dismal results.
Analysts estimate Yahoo’s revenue last year totaled about $5 billion, down from nearly $7 billion in 2007. During the same span, Google’s revenue soared from $17 billion to an estimated $38 billion.
Thanks largely to cost-cutting measures imposed by Bartz, Yahoo has become more profitable. Last year, it earned an estimated $1.1 billion, up from $660 million in 2007.
Still, investors are disappointed with the downturn in revenue at a time when advertisers are spending more money on the Internet.