PayPal Guru Thompson To Take Over As New Yahoo CEO
January 4, 2012

PayPal Guru Thompson To Take Over As New Yahoo CEO

Veteran web giant Yahoo announced today that PayPal President Scott Thompson will be taking over as the company´s chief executive.

In light of Yahoo´s struggle in recent years to remain a key player in the Internet world, many shareholders and company insiders are hoping that Mr. Thompson will do for their company what he did for eBay Inc´s payment branch.

Mr. Thompson will be joining the Yahoo team some five months after its last controversial CEO Carol Bartz was let go, leaving the company essentially leaderless for almost half a year.

After starting his career as a software platform designer for Visa, Thompson catapulted to fame after breathing new life into eBay with the creation of its revolutionary payment system PayPal in early 2008. During his time as PayPal´s chief technology officer, the eBay branch more than doubled its user base from 50 million to over 100 million. Still going strong several years later, recent data indicates that PayPal processed nearly $30 billion in payments in just the third quarter of 2011 alone.

Amidst standing rumors that Yahoo might eventually be bought out or broken up and sold, stakeholders in the company are hoping that Mr. Thompson will be able work his magic again to bring Yahoo back into competition with web juggernauts like Google and Facebook.

“I´m from Boston, we´re the underdogs since the beginning of time. Hopefully that spirit has held through,” Thompson told journalists in an interview. “I like doing complicated, very difficult, very challenging things.”

Thompson, who will effectively take over the reins to the company on January 9, will simultaneously become a Yahoo board member. Exuding confidence in the company´s newest member, chairman Roy Bostock told analysts today in a joint conference call with Thompson that the company had no intentions of going private or being broken up.

Yet for those who think that a wholesale buy out of the company would be the best deal for Yahoo in its current plight, the recruitment of Mr. Thompson might prove to be something of a liability for the company in the long term.

While confident of Mr. Thompson´s competence as a manager, Brett Harris of the investment firm Gabelli and Co. was surprised by his appointment and thinks that his leadership as CEO might ultimately be a detriment to the company´s salability.

“It´s probably a slight negative for Yahoo, because it makes the sale of the entire company to someone like Microsoft less likely,” explained Harris.

Thompson´s former colleagues at eBay were equally surprised by his decision to jump ships for Yahoo. eBay CEO John Donahoe reportedly wrote in a staff memo that Thompson´s move was an unexpected “shock.”

“Scott informed me Tuesday afternoon, saying that despite his passion for PayPal, this was an opportunity he felt he had to take,” wrote Donahoe.

A number of industry analysts have been skeptical about Thompson´s credentials in this new role. While an excellent payments manager, they say that he lacks experience in online media advertising–one of Yahoo´s core cash generators in recent.

“I am not convinced that a payments executive is the right choice for a leading online media company, but it is notable that Thompson has a strong Internet and technology background, which could help Yahoo in its uphill battle to compete against stronger technology-focused enterprises,” said Colin Sebastian, an analyst at RW Baird.

During an open conference call that came after the announcement, both the media and industry analysts pelted Mr. Thompson about the company´s slipping hold on display advertising. Thompson´s reply was measured yet confident, indicating that there might be a slight learning curve as he familiarizes himself with the company structure over the coming months and years

“It´s too early for me to have any informed opinion as to the display space, what´s going on there and what´s happening next. I have a lot to learn, and it´s still very early days,” he said.

“But down in that data we´re going to find ways to innovate and compete,” he added confidently.

Yet amidst talks that Yahoo may be significantly trimming back its multi-billion dollar investments in China´s Alibaba Group, insiders say that one of Thompson´s first major projects at Yahoo could be to oversee the sale of the company´s large Asian holding. And with Alibaba executives already talking about an eventual bid to buy Yahoo outright if the negotiations go awry, Thompson could find himself in an extremely powerful position for shaping the future constellation of the World Wide Web.

“A CEO who´s respected in the Internet industry taking control and giving it a unified vision will be very helpful,” Jordan Rohan, an analyst at Stifel Nicolaus, told Reuters reporters Alexei Oreskovic and Yinka Adegoke.

“The sale of the Asian assets is what happens first and what happens afterwards is just a question of how they deploy the cash they get from the sale.”

In 2008 Yahoo deflected Microsoft´s unsolicited $44 billion takeover bid and saw its share prices plummet shortly thereafter in the wake of the global recession, which eventually led company co-founder Jerry Yang to resign amidst intense criticism from investors.

Analysts put the company´s current market value at around $20 billion

Thompson optimistically stated that his goal at Yahoo is “to return this business to one of the great iconic brands. I have a core belief that what happens in the next five years, and the next ten, is almost impossible to imagine.”

“I´m genuinely excited to be here,” he said towards the end of the call. “I would not be here if I didn´t think the future of this brand could be spectacular.”

After exploding onto the still-nascent internet scene in the 1990s as the industry´s undisputed heavyweight, Yahoo has struggled to remain a serious web contender in the new millennium amidst increasingly intense competition from newcomers.

Yahoo´s chief financial officer Tim Morse has served as interim CEO since Ms. Bartz´s departure late last summer. Mr. Morse, who will also be joining the company´s board, will be returning to his previous position as Thompson´s steps in to take over the reins.


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