SAN FRANCISCO — Yahoo still has credibility issues, even after casting aside CEO Scott Thompson because his official biography included a college degree that he never received.
The troubled Internet company’s next challenge will be convincing its restless shareholders and demoralized employees that the turnaround work started during Thompson’s tumultuous four-month stint as CEO won’t be wasted.
It won’t be an easy task, given that Yahoo Inc. has now gone through four full-time CEOs in a five-year stretch marked by broken promises of better times ahead. Yahoo’s revenue and stock price have sagged while rivals such as Google Inc. and Facebook Inc. are growing as advertisers spend more money online.
“Yahoo has been floundering for years and it looks like there is going to be at least several more months of indirection now that another CEO is coming in,” said Adam Hanft, who runs a consulting firm that specializes in brand reputation and crisis management.
Yahoo’s hopes are now resting on Ross Levinsohn as its interim CEO. Levinsohn was successful running Internet services within Rupert Murdoch’s media empire at News Corp. before one of Yahoo’s former CEOs, Carol Bartz, hired him in November 2010 to aid her mostly fruitless attempt to fix the company.
Thompson, who was hired as Yahoo’s CEO in January to fill a void created by Bartz’s firing, promoted Levinsohn last month to oversee the company’s media and advertising services throughout the world.
“This may seem like a great deal of news to digest, but as you are all keenly aware, Yahoo is a dynamic, global company in a dynamic, global industry, so change — sometimes unexpected and sometimes at lightning speed — is something we will continue to live with and something we should embrace,” Levinsohn told employees in a Sunday memo that was provided to The Associated Press.
“The bottom line is that the situation at Yahoo is a mess,” Macquarie Securities analyst Ben Schachter wrote in a Monday research note. “It remains unclear how the new management will turn things around at Yahoo.com and how quickly yet another new strategy can be formulated.”
Yahoo tried to make Levinsohn’s job slightly easier by reaching a truce with dissident shareholder Daniel Loeb, a hedge fund manager who exposed the inaccurate information on Thompson’s bio and had made it clear he would continue to publicly skewer the company unless he was given a chance to help develop a turnaround strategy.
To placate Loeb, Yahoo is shaking up its board of directors, which has been in a state of flux for several months.
Although Yahoo gave no official explanation for Thompson’s abrupt exit, it was clearly tied to inaccuracies in his biography on the company’s website and in a recent filing with the Securities and Exchange Commission.
In a twist, The Wall Street Journal reported Monday that Thompson had told the board last week that he has thyroid cancer. The diagnosis contributed to his decision to step down, according to the newspaper’s unidentified sources.
Yahoo isn’t paying Thompson a severance package, according to a document it filed Monday. The contract he signed in January entitled him to severance if he was terminated “without cause.”
Yahoo’s stock has been sagging since it squandered an opportunity to sell itself to Microsoft Corp. in May 2008 for $33 per share, or $47.5 billion.
The shares, which haven’t traded above $20 since September 2008, climbed 31 cents to close at $15.50, leaving Yahoo with a market value of $19 billion. That’s roughly the same as the individual fortunes of Google co-founders Larry Page and Sergey Brin, whose company went public in 2004.
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