Yahoo! Hires a New Spinal Tap Drummer

Being CEO at Yahoo! (Nasdaq: YHOO  ) has never been a permanent position, and now it's Scott Thompson's turn at the top.

The dot-com giant tapped Thompson as the company's new helmsman this morning. His previous gig was heading up eBay's (Nasdaq: EBAY  ) PayPal. There's no denying that the online financial payment platform is the Kim Kardashian of eBay's family tree -- but it's still a Kardashian.

What can Yahoo! gain by bringing on a transaction specialist? Then again, what was Yahoo! thinking when it turned to a Hollywood executive or a retired CEO of an architecture software company for leadership?

Shares of Yahoo! opened slightly lower on the news this morning, but it remains to be seen if the market isn't impressed by Thompson or if the bigger issue is that a choice was made at all.

After all, the folks who have been piling into the stock in recent weeks -- taking it from the low teens to the mid teens -- have done so on the speculation that Yahoo! will either be acquired or enter into asset sales that will unlock shareholder value. The very act of appointing a new CEO, instead of letting its CFO continue to serve as interim CEO until the potential suitors armed with chef knives are sorted out, may be interpreted as a sign that Yahoo! isn't going to be acquired anytime soon.

Thompson is still an odd choice. Before his stint at PayPal, he held other tech banking leadership positions at Visa and Barclays. There's nothing in that resume that would seem to indicate that Thompson has the vision to create great content or identify the next killer app that will put Yahoo! back on the map for growth investors.

Yahoo! is still relevant, but revenue excluding traffic acquisition costs fell 5% in its latest quarter. If Yahoo! isn't going to take a Ginsu knife to its Asian assets or sell itself whole, it will need a CEO with a plan that consists of more than simply handing off its search business to Microsoft (Nasdaq: MSFT  ) for a steady trickle of loot the way that Carol Bartz did. Please don't tell me that the master plan here is to dust off the flawed Yahoo! PayDirect financial platform that became another PayPal-wannabe casualty in 2004.

It won't be. It can't be.

Thompson is here, and he's probably the right choice because Yahoo! probably doesn't have much of a choice. How long do you think the line of seasoned execs wanting this gig can realistically be? Yahoo! is a company that has gone through a few ineffectual CEOs now, and the stock has run up in anticipation of a buyout. If nothing materializes, the stock will tank again, making it that much harder for the incoming CEO to gain the trust of investors. Heading up Yahoo! is starting to seem like the ever-changing role of drummers in This Is Spinal Tap, each one lasting only long enough to expire in grandiose fashion.

Thompson starts next week. Good luck.

If you want to follow the Yahoo! saga closely, add Yahoo! to My Watchlist.

The Motley Fool owns shares of Yahoo! and Microsoft. Motley Fool newsletter services have recommended buying shares of Yahoo!, eBay, and Microsoft. Motley Fool newsletter services have recommended creating a bull call spread position in Microsoft and writing puts in eBay. Try any of our Foolish newsletter services free for 30 days. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.

Longtime Fool contributor Rick Munarriz calls them as he sees them. He does not own shares in any of the stocks in this story. Rick is also part of the Rule Breakers newsletter research team, seeking out tomorrow's ultimate growth stocks a day early.


Read/Post Comments (0) | Recommend This Article (2)

Comments from our Foolish Readers

Help us keep this a respectfully Foolish area! This is a place for our readers to discuss, debate, and learn more about the Foolish investing topic you read about above. Help us keep it clean and safe. If you believe a comment is abusive or otherwise violates our Fool's Rules, please report it via the Report this Comment Report this Comment icon found on every comment.

Be the first one to comment on this article.

Sponsored Links

Leaked: Apple's Next Smart Device
(Warning, it may shock you)
The secret is out... experts are predicting 458 million of these types of devices will be sold per year. 1 hyper-growth company stands to rake in maximum profit - and it's NOT Apple. Show me Apple's new smart gizmo!

DocumentId: 1751968, ~/Articles/ArticleHandler.aspx, 12/17/2014 6:22:42 PM

Report This Comment

Use this area to report a comment that you believe is in violation of the community guidelines. Our team will review the entry and take any appropriate action.

Sending report...

Apple's next smart device (warning, it may shock you

Apple recently recruited a secret-development "dream team" to guarantee its newest smart device was kept hidden from the public for as long as possible. But the secret is out. In fact, ABI Research predicts 485 million of this type of device will be sold per year. But one small company makes Apple's gadget possible. And its stock price has nearly unlimited room to run for early-in-the-know investors. To be one of them, and see Apple's newest smart gizmo, just click here!


Advertisement