Sunnyvale, California -- Long struggling Internet pioneer Yahoo Inc. on Wednesday finally appointed top PayPal's executive Scott Thompson as its new chief executive in an effort to continue as an independent entity, hoping the well-regarded Internet technology and e-commerce expert would rejuvenate growth at the Internet giant that has been losing the battle over online ads.
Thompson, the 54-year-old president of eBay's PayPal electronic payments division, joins Yahoo during a severe turbulent period, as the company proceeds with a strategic review in which discussions have included the possibility of being sold, taken private or broken up--is now tasked with turning around Yahoo's core online-advertising business, the company said.
But, under extreme pressure from displeased shareholders, the company also left the door open to disposing of pieces, after months of fielding approaches from Asian partners, private equity investors and giants like Microsoft.
Thompson said he aimed to boost Yahoo reader traffic to attract more advertisers, arguing that the company's assets were under-appreciated by the market. His hiring follows more than four months of strategic limbo when the Sunnyvale, Calif., company operated without a permanent leader following the September firing of CEO Carol Bartz.
But even with a new enthusiastic CEO, Yahoo faces a long list of strategic questions with many possibilities still on the table, said people familiar with the matter.
Scott Thompson, president and chief executive officer of PayPal Inc. Source: (Bloomberg News)
Yahoo said Thompson will play a big role in the ongoing strategic review that Yahoo's board is conducting, said one of the people familiar with the matter, and would focus on the company's core business and work with the board to “identify the best approaches for the company and its shareholders.”
“His profound knowledge of online businesses associated with his team-building and operational capabilities will rejuvenate the energy, focus, and momentum necessary to grow the core business and deliver increased value for our shareholders,” chairman Roy Bostock said in a statement.
“I'm from Boston, we are the underdogs since the beginning of time. Hopefully that spirit has held through. I like doing complicated, very difficult, very challenging things,” Thompson said in an interview.
But Messrs. Bostock and Thompson stressed that their first priority would be to turn around Yahoo's core online-ad business, which competitors such as search engine leader Google Inc. and social media giant Facebook Inc. have chipped away at over the years. In the conference call, Bostock said Yahoo would almost certainly remain publicly traded. “I do not envision us not being a public company going forward,” he said.
Thompson, who starts on January 9, will also join Yahoo's board. He managed eBay's PayPal since early 2008, and was previously its chief technology officer. Under his command, Yahoo said PayPal increased its user base from 50 million to more than 104 million active users. PayPal processed $29 billion in payments in the third quarter of 2011.
As CEO, Thompson said he hopes to appoint executives and to use Yahoo's “arsenal” of resources, including its balance sheet, to make acquisitions “if it is feasible.” He said Yahoo would build new Web services, and “if we do not have it, we will find it in the market...and we will do it fast.”
Click to enlarge... Image Source: (Wall Street Journal)
Trip Chowdhry of Global Equities Research said Thompson's PayPal profile could help take Yahoo in the still-open market of payments made with mobile phones, after having lost battles in the search, advertising and social networking businesses.
“Whatever Yahoo is doing today is getting to be irrelevant by every day,” Chowdhry said. “Under the new CEO, Yahoo should be focused on defining the 4th Generation of Internet wave -- which is mobile payments.”
But he also called for the complete overhaul of the Yahoo board including Yang.
Thompson said in an interview that Yahoo was in a strong position with its large user base of more than 700 million people.
“The traffic itself that these sites generate is a very big number, the collection of assets that sit below this core business I think are not well understood and clearly have tremendous opportunity to be leveraged as we look forward to the future.”