* CEO Scott Thompson steps down after four months
* Yahoo media chief Ross Levinsohn to be interim CEO
* Yahoo reaches settlement with hedge fund Third Point
By Alexei Oreskovic
SAN FRANCISCO, May 13 Yahoo Inc Chief
Executive Scott Thompson has stepped down after a controversy
over a fake computer science college degree on his biography,
the third CEO in three years to leave the Internet company
struggling to define its future.
The departure is a victory for hedge fund manager Daniel
Loeb of Third Point LLC, which is one of Yahoo's largest outside
shareholders and brought the discrepancy in Thompson's
educational background to light.
Yahoo said in a statement that its global media head, Ross
Levinsohn, will be interim CEO, replacing Thompson who has left
the company. It did not give a reason for his exit but said the
board had settled a proxy battle with Third Point and will
nominate three of its slate of four candidates to Yahoo's board.
Thompson's departure after just four months on the job
throws into question the future of Yahoo as it struggles to
revive growth amid fierce competition from the likes of Google
Inc and Facebook Inc, and produce a long-term strategy
to convince investors to reverse its share slide.
Yahoo had recently resumed negotiations to sell all or part
of its more than 40 percent stake in Chinese Internet and
e-commerce company Alibaba back to the Chinese company, after
torpedoing a previous plan to do a complex tax-free transaction.
"Truly unreal. This company was struggling to find its path
before any of this happened, and the situation will make them
lost in the woods for that much longer," Macquarie Securities
analyst Ben Schacter said. "It is not an overstatement to say
that Yahoo has profound structural problems."
"The key question for shareholders remains how will they
monetize the Asia assets. The board and shareholders, not an
interim CEO, will need to figure it out," Schacter said.
Levinsohn, who made his name running News Corp's
Fox digital business, is often mentioned as a CEO contender but
the company went first with Carol Bartz in January 2009, fired
her in September last year, and then named Thompson, the former
president of eBay Inc division PayPal, in January.
"The disfunctionality of this company is relatively
unparalleled. Nothing they do seems to work," said Lawrence
Haverty, a fund manager with GAMCO Investors, which owns Yahoo
shares. "Right now I think a sale of the company is the best
option. We believe the assets are worth somewhere north of $20 a
share on a break up basis."
Yahoo shares closed at $15.19 on Nasdaq on Friday. The
company also appointed new director Fred Amoroso as chairman of
the board, replacing Roy Bostock who left in February.
"Importantly, today's announcements lay to rest the
unfortunate and serious distractions surrounding our senior
leadership and the composition of our Board going forward,"
Levinsohn wrote in a staff memo on Sunday. He added, "I believe
in the tremendous strength and value of our brand, and in our
relationship with our users and partners."
A media veteran, Levinsohn is popular among Yahoo's
rank-and-file and has credentials as a negotiator. He had helped
steer News Corp's acquisition of MySpace, and had started an
investment fund to buy interests in various digital and media
companies across the globe before joining Yahoo.
Levinsohn, who previously headed up Yahoo's Americas
business, holds a Bachelor of Arts in Communications from The
American University according to Yahoo's website.
"He is well-respected in the Valley, Hollywood and on
Madison Avenue," said Jason Hirschhorn, a former MTV digital
executive. "Yahoo has to lean into media and he has the plan."
A HASTY EXIT
Yahoo acknowledged last week that Thompson does not have a
computer science degree despite what was stated in his official
company biography and in regulatory filings with the U.S.
Securities and Exchange Commission.
In its first-quarter 10-Q filing with the SEC last
Wednesday, Yahoo acknowledged that "uncertainties" about
Thompson and questions about the company's "future direction"
could hurt business opportunities and make it difficult to
attract employees and business partners.
Emails sent to Thompson's official Yahoo email address were
already bouncing back on Sunday morning. He had only just began
to push through a new strategy that included layoffs of 2000
people, or almost a 10th of its workforce.
Thompson had indicated his intention to move the company
away from its dependence on display advertising and focus more
on data and personalization, but it is not clear if Levinsohn,
whose background is in advertising, would keep the plan intact.
Loeb, who has accused Yahoo of being dismissive of
investors' input, said he was happy to join the board along with
his other nominees Michael Wolf and Harry Wilson: "We are
confident this Board will benefit from shareholder
representation, and we are committed to working with new
leadership to unlock Yahoo's significant potential and value."
Third Point owns a 5.8 percent stake in Yahoo.
"This is a big victory for Third Point. It strengthens their
argument that this board was dysfunctional, and it's going to
increase Third Point's ability to shape the direction of the
company," Colin Gillis of BGC said. "Net net, this is a
positive. It puts the situation behind. It was impossible for
him (Thompson) to function effectively."
Thompson's departure was reported earlier by the widely
followed technology blog AllThingsD.
Yahoo was a dominant player in the early days of the
Internet but has struggled for years to maintain its relevance
as social media, mobile computing and highly personalized
advertising have redefined the industry landscape.
While brands such as Yahoo News, Yahoo Sports and Yahoo
Finance remain among the most popular destinations on the Web, a
relentless industry-wide decline in display advertising prices
has made it difficult to make money on those assets and raised
questions about the long-term viability of an ad-based strategy.
Some said Yahoo could ill-afford yet another controversial
"This CEO mess is going to leave Yahoo all tied up for at
least several more quarters," said industry analyst Jeff Kagan.
"They have tried several strategies with several CEOs and they
just can't stop the fall."