Yahoo Inc investors welcomed the appointment of a media veteran as interim Chief Executive of the Internet company after Chief Executive Scott Thompson stepped down following a controversy over his academic record.
Continue Reading Below
Yahoo shares rose 1.7 percent after the company said on Sunday that Thompson was leaving and Ross Levinsohn will become interim CEO. It is also giving three board seats to the activist hedge fund headed by Daniel Loeb, settling a looming proxy fight. Yahoo Chairman Roy Bostock is also stepping aside.
Thompson's departure caps another of many tumultuous episodes involving Yahoo management over several years and comes as Yahoo struggles to regain relevancy and revive growth amid fierce competition from Google Inc and Facebook.
"Investors are likely to take comfort in fresh leadership, particularly at the board level, as eight of the 11 board seats were named in the past year," wrote Evercore Partners analyst Ken Sena in a note.
Thompson exited the company 10 days after Loeb's hedge fund, Third Point, accused him of padding his biography with a computer science degree. Third Point is one of Yahoo's largest shareholders, with a 5.8 percent stake.
Macquarie analyst Ben Schachter said that the management changes were necessary after "Resumegate," even though he worried that Yahoo would essentially start from scratch again with its strategy.
Continue Reading Below
"As a practical matter, what this means for the company is that the past four months have been little more than a false start, and it must once again start at the beginning in terms of establishing a strategic direction," Schachter said in a research not.
Analysts applauded Levinsohn's appointment because of his history in media and advertising sales. Schachter said he may be "auditioning to take on this role on a permanent basis."
"We view Mr. Levinsohn as well-equipped to lead the organization and to build off of the company's core strengths - advertising products and digital media," said Credit Suisse analyst Spencer Wang.
However, even with Levinsohn at the helm, Macquarie's Schachter said that Yahoo's future is uncertain.
"The bottom line is that the situation at Yahoo is a mess." Schachter said. "It remains unclear how the new management will turn things around at Yahoo.com and how quickly yet another new strategy can be formulated."
Before resigning Thompson disclosed to the board he had been diagnosed with thyroid cancer, the Wall Street Journal, reported, citing sources.
Yahoo representatives did not immediately respond to requests for comment on the report.
Shares of Yahoo rose 26 cents or 1.7 percent to $15.45 in morning trade on Nasdaq after the news. (Reporting By Jennifer Saba; additional reporting by Sinead Carew; editing by Gerald E. McCormick, Jeffrey Benkoe and Sofina Mirza-Reid)