YAHOO, THE struggling internet media company, announced its new chief executive would be Scott Thompson, the president of PayPal, the online payment service owned by eBay.
The 54-year-old Mr Thompson, analysts say, has a background mainly in technology rather than digital media or corporate turnarounds. While PayPal is a consumer service, analysts said that was very different from a media company.
Mr Thompson joins a company that is losing momentum against the ascendant powers in the consumer internet business – Google and Facebook. Its woes persist even though it has 700 million online visitors a month, one of the largest audiences on the web; is a leader in online news, sports and finance; and will report net profit of more than $1 billion in 2011 on revenue of nearly $4.44 billion, estimates Jordan Rohan, an analyst at Stifel Nicolaus.
Still, Facebook surged past Yahoo last year in online display advertising in the United States for the first time, according to eMarketer, a research firm. Yahoo has farmed out its search advertising to Microsoft, in a cash payment and revenue-sharing deal.
The overall online advertising market increased more than 20 per cent to $31.3 billion last year, but Yahoo’s share slipped to 11 per cent from 13.3 per cent in 2010, eMarketer estimates.
Yahoo’s slippage prompted the removal last September of Carol Bartz, a respected technology executive recruited to be Yahoos chief executive in 2009. Ms Bartz proved unable to rejuvenate the company. Now it is Mr Thompson’s turn.
“Yahoo seems like the ideal fixer-upper from afar,” Mr Rohan said. “But internet assets are hard to fix.”
Yahoo chairman Roy Bostock said Mr Thompson had proved at PayPal that he could take a company with solid assets and build a business. That is the central challenge at Yahoo, Mr Bostock said.
The problem, he said, was that Yahoo had been “treading water”,
Analysts say Mr Thompson must first decide how to focus Yahoo’s strategy.
In recent years, the company has spread itself too thin by making huge investments in technology and also in creating original media content, said Shar Van Boskirk, an analyst at Forrester Research. That, she noted, is in contrast to Google, which aggregates content from around the web and concentrates its investment in technology, but does not spend money to create media content itself.
Mr Thompson, industry analysts say, will probably push to harvest more advertising dollars from all the consumer data it collects from people using its popular email service and visiting its sites, which cover a range of topics, including finance, sports and gossip.
At PayPal, Mr Thompson demonstrated an ability to take an existing business, redefine it and achieve strong growth. Under Mr Thompson, PayPal expanded its number of users to more than 104 million, from 50 million, and increased its revenue to more than $4 billion, from $1.8 billion. – ( New York Timesservice)
