Sunnyvale, California -- In a surprising turn of events, Internet pioneer Yahoo's apparently endless leadership struggles reached another crossroads on Sunday, May 13 when the executive board terminated the brief tenure of its latest CEO Scott Thompson, after a discrepancy in his credentials, the third CEO in three years to leave the Internet company struggling to define its future and replaced him with Executive Vice President Ross Levinsohn as interim chief executive.
Scott Thompson 54, was hired by Yahoo as CEO after a much lengthy search early this January, as the struggling Internet company was hoping that Thompson, would turn things around, agreed to stepped down Sunday after the company's board found evidence that contradicted his claim of innocence about his misstated academic record, people familiar with the matter said.
Scott Thompson in November 2011, when he was president of PayPal. Bloomberg News
In fact, an executive-search firm furnished Yahoo with information that appeared to show Thompson years ago had knowingly claimed to have a computer-science degree that he, actually, did not possess. He now becomes the fourth CEO to leave Yahoo in five years.
The departure heralded a major victory for hedge fund manager Daniel Loeb of Third Point LLC, which is one of Yahoo's another powerful outside stockholders and brought the discrepancy in Thompson's educational background to light.
Yahoo, in a statement stated that Thompson is being replaced by its global media head, Ross Levinsohn, as an interim CEO. It did specified any particular reason for his departure but said that the board had settled a proxy battle with Third Point and will nominate three of its slate of four candidates to Yahoo's board.
Thompson's departure was reported earlier by the widely followed technology blog AllThingsD. However, a person familiar with the matter quoted as saying that Levinsohn's appointment could be made permanent.
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Thompson last communicated on May 11, reportedly informing colleagues that a nationally known and respected executive placement firm edited an error into his resume that has been there for years and had caused him and his company much dismay.
“The company is starting from scratch yet again,” Ben Schachter, an analyst at Macquarie Capital, said in an interview. He has a neutral rating on the stock and doesn’t own it. “Scott put them in a very difficult position, and something had to happen.”
Amazingly, Levinsohn, who earned a name running News Corp's Fox digital business, is often observed as a CEO contender but the company went first with Carol Bartz in January 2009, dismissed her in September last year, and then named Thompson, the former president of eBay Inc division PayPal, in January.
“The dis-functionality of this company is rather unparalleled. Nothing they do seems to work,” said Lawrence Haverty, a fund manager with GAMCO Investors, which owns Yahoo shares. “Right now I think a sale of the company is the best option. We believe the assets are worth somewhere north of $20 a share on a break up basis.”
“Truly unreal. This company was struggling to find its path before any of this happened, and the situation will make them lost in the woods for that much longer,” Schacter said. “It is not an overstatement to say that Yahoo has significant structural problems.”
In addition to Levinsohn being named interim CEO, director Fred Amoroso was named non-executive chairman, succeeding Chairman Roy Bostock, who had been slated to leave this summer. Yahoo also agreed to add Loeb to its board along with two other directors nominated by his fund, Third Point LLC, to end a proxy fight.
“The key question for shareholders remains how will they monetize the Asia assets. The board and shareholders, not an interim CEO, will need to figure it out,” Schacter said.
Equally, since 2007, the Sunnyvale, Calif.-based company has had five CEOs (see image above): former Warner Bros. Chairman and co-CEO Terry Semel (2004-2007), co-founder Jerry Yang (2007-2009), Bartz (2009-2011), Thompson, and now Levinsohn. Semel resigned in 2007, with Yang replacing him.
Admittedly, Thompson's departure after just four months on the job once again casts bleak shadow into the future of Yahoo as it struggles to revive growth amid fierce competition from the likes of Google Inc and Facebook Inc, and produce a long-term strategy to convince investors to reverse its share slide.