22nd May 2012

Another new CEO for Yahoo!

After only five months in the top job at Yahoo! Scott Thompson is no longer CEO. This position at the troubled web company has fallen, temporarily at least, to Ross Levinsohn – a former executive at Rupert Murdoch’s News Corp. – with two years already under his belt at Yahoo!. Levinsohn’s chance to run Yahoo! can be seen as something like an audition, giving the board of directors time to evaluate other candidates and evaluate Levinsohn’s performance before offering anyone the job on a permanent basis. 

It’s certainly a critical time for Yahoo!’s future. Levinsohn is the fifth CEO at the company in just four years. It’s crucial display ads business is still haemorrhaging market share, and last month it laid off 2000 staff in an effort to save money. It looks like Levinsohn is in for a textbook example of a make-or-break first 100 days as CEO.

His previous experience in online advertising, while not entirely triumphant, may prove crucially important, as display ads are at the core of Yahoo’s business. Levinsohn was head of Interactive Media at News Corp. when the company bought MySpace for $580 million back in 2005 – a big mistake in hindsight but one that’s easy to understand when you consider the current frenzy surrounding the flotation of Facebook. MySpace looked like a very good bet at the time, and its subsequent fall from consumer favour has been partly blamed on an oversaturation of cheap display ads which detracted from users’ enjoyment of the site. This is all valuable knowledge Levinsohn has learned the hard way, and he can be put it to good use at Yahoo!.

As the wheels of the Yahoo! board of directors begin turning, yet again, on the search for a new CEO, the best policy for Levinsohn to follow is to simply act as if the job is already his. The last thing the company or the shareholders want is more uncertainty and more delays, so if Levinsohn can prove himself to be a decisive and confident leader the odds are tipped in his favour. And it looks like this is exactly what he’s doing.

Over the weekend he agreed a deal, valued at $7.1 billion in cash and shares, to sell back half of Yahoo!’s 40% stake in Chinese e-commerce company Alibaba. Though Yahoo! will take a loss on the deal, it gives them vital liquidity going forward, and maybe even more importantly, it projects a clear sense of mission for Yahoo! and a feeling that Levinsohn is taking control.   His priorities are clear – make an early impact, and ensure performance acceleration from the get-go.

Hilda Goold

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