Yahoo names Paypal's Scott Thompson as new head

Yahoo billboard being assembled Yahoo's new boss will hope to replicate the success he had at Paypal

US web portal Yahoo has named Scott Thompson, the president of online payments firm Paypal, as its new head.

He will fill the vacancy left by Carol Bartz, who was dismissed as chief executive in September after failing to turn around the company's fortunes.

Mr Thompson has headed Paypal, the payments division of eBay, since 2008, during which time its userbase doubled.

Yahoo is currently undergoing a strategic review as it has failed to keep up with rivals such as Google.

Analysis

Yahoo's new boss has a Google-sized problem to tackle. The basics don't look bad. The share price has recovered from the awful lows hit during the summer. Profits are stagnant, but still respectable. But Yahoo's challenges are becoming ever more urgent.

First and foremost Mr Thompson has to define what Yahoo should be. Technology firm? Media company? Online services provider? Search engine? Internet portal? All of the above?

Yahoo has spread itself too thin, both managerially and technologically. It tried to compete with Microsoft, Google, AOL and everybody else at the same time - and failed. Yahoo is not known for innovation anymore. Meanwhile, Facebook snuck up from behind and ate Yahoo's most valuable asset - the time its users spend online.

Selling troubled Yahoo to some naive investor might be an option, but anti-trust challenges make the outcome of any bid doubtful - unless Yahoo's Chinese partner Alibaba steps forward. But that in itself would be a political Pandora's box.

The US firm's key products, beside its search engine, include photo sharing site Flickr and its webmail platform.

However, its domination of webmail - and the ancillary services it offers its email account holders - is under threat as younger users migrate to social media sites such as Facebook and Twitter.

'Dark knight'

"Scott brings to Yahoo a proven record of building on a solid foundation of existing assets and resources to reignite innovation and drive growth, precisely the formula we need," said Yahoo chairman Roy Bostock.

He said that Mr Thompson would focus on Yahoo's core businesses, but would also work closely with the board on its strategic review of what new investments to make and existing business lines to dispose of.

"He's a dark knight," said Stuart Miles of retail technology blogsite Pocket-lint. "He's a nuts-and-bolts guy rather than a captain of industry."

The company faces two choices, according to Mr Miles - either to focus on product innovation like Google has done, or else to focus on media by promoting itself as a content hub.

"Yahoo.com has a killer amount of news and information," he said. "A lot of people see Yahoo as a media company.

"But he's a tech guy rather than a media guy. It's not clear whether he will focus on innovating products (which Yahoo has tried and failed to do) or focus on content creation."

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Markets gave the news a cool reception. Shares in Yahoo were down 3.1% at the close of trading in New York.

Shares in Paypal's parent, eBay, closed down 3.77%. The broader Nasdaq tech index closed up 0.33%.

Yahoo's share price has stagnated at about $15 ever since late 2008, refusing to go above $20, after it rejected an offer from Microsoft to buy up the company at $33 a share.

Revenues at the firm have stagnated, particularly compared with leading search engine Google, and Yahoo has had to lay off workers four times over the past three years.

The poor performance prompted Yahoo's board to ignominiously turf out Carol Bartz in September last year.

Tim Morse, who had been standing in as chief executive, will return to the role of chief financial officer when Mr Thompson takes over on 9 January.

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