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| Scott Thompson named Yahoo Inc's new CEO |
| San Francisco / Bloomberg Jan 05, 2012, 00:33 IST |
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Yahoo! Inc the interment company exploring strategic options, appointed Scott Thompson chief executive officer, four months after firing Carol Bartz for failing to drive a turnaround. Thompson was most recently president of EBay Inc's PayPal unit, Sunnyvale, California-based Yahoo, the largest US Web portal, said on Wednesday in a statement.
The new CEO will need to boost visitors to Yahoo's sites and attract more advertisers amid competition from Google Inc and Facebook Inc, while dealing with strategic decisions.
Yahoo has considered options including divestitures. Microsoft Corp and private-equity firms TPG Capital and Silver Lake have signed non-disclosure agreements to help size up a possible bid, people close to the companies said last year.
"It's probably a slight negative because I think the best outcome for Yahoo would be an all out takeover by Microsoft," said Brett Harriss, an analyst at Gabelli & Co in Rye, New York, who recommends buying the shares.
"Hiring a new CEO makes the sale of the whole company unlikely."
Yahoo, founded in 1994 by Jerry Yang and David Filo, fell 0.9 per cent to $16.13 at 9:31 am New York time. The stock lost 3 percent last year.
As San Jose, California-based PayPal's president, Thompson contributed to an increase of the payment service's users to more than 100 million, helping it close in on a goal of revenue as high as $7 billion by 2013, compared to $3.4 billion in 2010.
PayPal's services help retailers and individuals exchange funds for purchases or payments, even without a credit card.
Thompson, who has run the business since January 2008, also engineered the company's expansion to online daily deals and mobile payments.
"It's a surprising choice," said Ken Sena, an analyst at Evercore Partners Inc in New York who has an "equalweight" rating on Yahoo. "Scott has a great track record in payments and has proven an effective executive at PayPal and has major tech chops and international experience, but as content company, which Yahoo has increasingly become, his experience is kind of lacking."
Thompson may play a role in extracting value from Yahoo's international assets. Aside from its main interment portal business, Yahoo has stakes in Asian companies that some investors, including Third Point LLC, have said are undervalued. Yahoo holds about 40 percent of Alibaba Group Holding Ltd, China's biggest e-commerce company. Yahoo estimated the stake was worth about $14 billion on a pretax basis in October.
Thompson's primary focus will be on the "core business," and he will work closely with the board on the company's strategic review, Chairman Roy Bostock said in the statement.
"As part of this process, Yahoo is considering a wide range of opportunities for the company's business, as well as specific investments or dispositions of assets," Bostock said.
In her less than three years as CEO, Bartz reduced costs with job cuts and formed a search partnership with Microsoft Corp. Still, Yahoo failed to make much headway in the US advertising and search markets.
During the second quarter, Bartz's last full three-month period as CEO, Yahoo reported revenue that fell short of estimates as her overhaul of the US sales force made it harder to close deals and slowed growth in display advertising.
In early September, Bostock fired Bartz over the phone, kicking off a wave of takeover speculation. Tim Morse, who had been chief financial officer, became interim CEO. The company initiated a strategic review "to position the company for future growth."
Yahoo drew interest from multiple parties after announcing the review, according to a memo to employees in September.
That included Jack Ma, chief executive officer of Alibaba Group, who said in October he was interested in buying Yahoo. Private-equity firms TPG Capital and Silver Lake signed non- disclosure agreements to help size up a possible bid for Yahoo, people close to the companies said in November. Microsoft signed a non-disclosure agreement as well, a person briefed on the matter has said.
KKR & Co. and Blackstone Group LP also were among the private-equity firms considering possible bids, people with knowledge of the matter said in October. Also, Google was considering providing financing for an acquisition of Yahoo by another company or a group of bidders, according to another person who has been briefed on the matter.
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