Yahoo Wednesday confirmed the hiring of PayPal president Scott Thompson as its new CEO four months after ousting Carol Bartz from that role amid declining revenue and a stagnant stock price. The task of revitalizing the beleaguered Internet giant now falls to Thompson, who had led eBay’s thriving online payments unit since 2008 and was previously its chief technology officer.
He begins in the new post next Monday.
Tim Morse, who had served as interim CEO since Bartz’s departure in September, will resume his role as CFO at Yahoo. The blog All Things D had reported late Tuesday night that Thompson, who will also serve on Yahoo's board, would be named to succeed Bartz.
In a statement announcing Thompson’s appointment, Yahoo’s board chairman Roy Bostock said the company’s new CEO would "restore the energy, focus, and momentum necessary to grow the core business and deliver increased value for our shareholders.”
He noted that under Thompson, PayPal had doubled its user base to more than 104 million active users in 190 countries worldwide while increasing revenues from $1.8 billion to more than $4 billion in 2011. Prior to joining the payments company, he was a technology executive at Visa subsidiary Inovant and was also CIO of Barclays Global Investors.
During a conference call with analysts Wednesday, Thompson said Yahoo needed to refocus on its core business of “providing the great experience that fully engages our users -- everything else flows from that.” While deflecting questions about specific plans for reviving Yahoo, he cited growing shareholder value and topline growth as his top priorities as chief executive.
Thompson joins Yahoo as the Internet portal continues to pursue a strategic review encompassing a range of options, including the sale of all or parts of the company. That effort recently led to talks over a possible deal to unload its Asian assets -- a 40% stake in Chinese e-commerce company Alibaba Group and a 35% stake in Yahoo Japan -- to focus on its core U.S. operations. The transactions could bring in about $17 billion.
Yahoo has also fielded offers from private equity firms looking to buy minority stakes in the company -- but so far, such bids have been deemed too low, according to reports.
A group of investors led by private-equity firm Silver Lake offered to buy a 10% to 15% stake in Yahoo valued at about $20.6 billion, Bloomberg reported in late November.
Bostock said during the call that Thompson’s hiring would not delay any negotiations the company is involved in regarding the sale of its Asia assets and said he would “help lead and direct those processes.”
The Yahoo board adopted the strategic review after firing Bartz, who failed to turn around the company’s fortunes during a rocky two-year tenure in which it failed to keep pace with major Internet rivals like Google and Facebook.
Research firm eMarketer has estimated U.S. advertisers will increase online spending 20% more this year to $31 billion, but Yahoo’s market share could decline as much as 11% in 2011, down from 13% in 2010. By contrast, Google’s share is expected to rise to 41% this year, while Facebook’s will grow to 7% from almost 5% in 2010.
Yahoo continued to struggle in the third quarter, when net revenue fell 5% from a year ago to $1.07 billion on softening in both its display ad and search businesses. Gross revenue of $1.22 billion was down 24% from a year earlier.
Thompson’s technology background raises the question of whether he has the appropriate experience to lead an ad-based digital media company. Bartz’s lack of industry understanding was cited as one of the reasons for her brief tenure. Bostock, however, said Thompson’s focus on the customer experience at PayPal is key to rebuilding advertising success at Yahoo.
The company’s investors hardly seemed heartened by the announcement of a new Yahoo CEO. Its stock was trading down about 2% following the news.