Yahoo names PayPal’s Scott Thompson new chief executive

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Four months after it fired Carol Bartz for failing to engineer a turnaround, struggling Internet company Yahoo has named Scott Thompson as her successor.

Thompson, who ran EBay’s PayPal unit, could ‘refocus’ Yahoo’s business, which has deteriorated without a permanent chief executive officer, analysts said.

Thompson will focus on turning around Yahoo’s “core business,” its media and advertising assets, and work closely with the board on a review of the company’s strategy, Chairman Roy Bostock said.

Thompson starts Jan. 9. His appointment will not slow down the company’s strategic review, which includes the possibility of unloading valuable stakes in Asian Internet companies and selling a minority stake to private equity investors.

Yahoo is still considering ‘a wide range of opportunities for the company’s business as well as specific investments or dispositions of assets,’ Bostock said.

Thompson must boost Yahoo as it loses eyeballs and ad dollars to Google and Facebook. Yahoo still has an online audience of more than 700 million visitors a month. But it’s quickly losing market share to Google and Facebook. Facebook catapulted over Yahoo in U.S. display ad revenue last year while Google remains the third-largest purveyor of display ads, according to research firm EMarketer.

Thompson, who ran PayPal since January 2008, is credited with increasing revenue to more than $4 billion from $1.8 billion. He helped the payments company expand into online daily deals and mobile payments. He also helped PayPal expand its number of users to more than 104 million from 50 million. But he lacks experience on the media content side of Yahoo’s business.

Thompson is betting that Yahoo’s business is stronger than people think.

That was also the opinion of Bartz, who during her tenure reduced costs and formed a search partnership with Microsoft, but could not help Yahoo regain its sales growth in advertising and search. Bostock fired Bartz over the phone. Tim Morse, who had been chief financial officer, became the interim chief executive in September. He will return to his post as chief financial officer.

Thompson’s selection could signal that Yahoo is preparing to reclaim its mantle as a technology company.

‘We believe the appointment of Scott Thompson as CEO is a slight positive for Yahoo as he will likely act quickly to provide direction to the company that it has lacked in the past few months,’ said Piper Jaffray & Co. analyst Gene Munster. ‘Thompson’s background is strong in technology, but he lacks media experience. We believe this could suggest that Thompson will focus Yahoo more on technology than Carol Bartz or Terry Semel in the past.’

Analysts cautioned that Yahoo faces significant challenges.

‘As always execution will be key,’ Macquarie Capital analyst Ben Schachter said. ‘As much as we respect what Scott has done at PayPal, Yahoo faces significant challenges in terms of brand identity, technology infrastructure, employee morale, competitive challenges, the transition to mobile etc. To say that Scott has his work cut out for himself is an understatement.’

Yahoo shares fell 34 cents, or 2%, to $15.91 in trading Wednesday. Shares of EBay fell $1.09 or 3% to $30.25.

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-- Jessica Guynn