Yahoo’s previous turnaround attempts have flopped under three different leaders with dramatically different backgrounds — former movie mogul Terry Semel, beloved Yahoo cofounder Jerry Yang (楊致遠) 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 (阿里巴巴集團) — 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 US$17 billion, according to published reports.
Yahoo chairman Roy Bostock dismissed recent speculation that Yahoo might team up with buyout firms to take the firm private.
“It has not been on our radar screen,” he said on Wednesday. “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 its fractured relationship with investors fed up with a litany of broken turnaround promises.
Yahoo’s stock hasn’t traded above US$20 in more than three years. On Wednesday, it dropped US$0.51, or 3 percent, to close at US$15.78. Those are difficult numbers for stockholders to stomach, given that Microsoft Corp offered to buy Yahoo in its entirety for US$33 per share, or US$47.5 billion, in May 2008.
“There is no shareholder or investor who will be less patient than me,” Thompson, a Boston native who still has his hometown accent 18 years after moving to California, said in an interview. “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 US$5 billion, down from nearly US$$7 billion in 2007. During the same span, Google’s revenue soared from US$17 billion to an estimated US$38 billion. Privately held Facebook doesn’t disclose its finances.
Thanks largely to cost-cutting measures imposed by Bartz, Yahoo has become more profitable. Last year, it earned an estimated US$1.1 billion, up from US$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.
Yahoo was attracted by Thompson’s impressive track record at PayPal, where he was chief technology officer for three years before becoming the online payment service’s top executive in 2008.
PayPal’s annual revenue more than doubled from US$1.9 billion when Thompson took over the division to an estimated US$4.4 billion last year.