The revolving CEO door never seems to stop turning at former tech monolith Yahoo! (Nasdaq: YHOO). The latest top executive to exit is Ross Levinsohn, the interim CEO who had the job for a cup of coffee between the tenures of Scott Thompson and the company's new hire, Marissa Mayer. It's never good to lose a talented exec; the question is whether Levinsohn's exit is more a plus or a minus for his now-former company.
Help wanted
Yahoo! needs good managers. The company's revenue and bottom line haven't gone anywhere significant over the last few years and quarters. Much of this happened quite some time ago following its usurpation in Internet search by Google (Nasdaq: GOOG), which now commands around 67% of the search market (Yahoo! by contrast, languishes at 13%). Yahoo! coulda been a contender; in its most recent fiscal year, it took in barely one-eighth the revenue of its rival, while its market cap was more than 90% lower.
It's generally been a bad run for the company over the past decade or so. Most notoriously, in 2008 it rebuffed a buyout offer from Microsoft (Nasdaq: MSFT) that would have put $31 per share in its shareholders' pockets. The company's leadership at the time thought the price undervalued the stock. The rest of the world begged to differ, as the shares fell and never got up. They currently trade at barely half the level of Microsoft's offer.
Lastly, there is the never-ending story that is Alibaba and Yahoo! Japan (which, despite the name, is an independent and separately listed company trading on the Japanese exchange). For years, Yahoo! has held substantial stakes in both Asian companies. But in what seems to be a pattern of avoiding large-scale deals, it never seemed to find a sale price it was comfortable with for either. The glacier started to melt only a few months ago, when the company finally, finally, agreed to a deal with Alibaba for the Asian company to buy half of Yahoo!'s stake in it for $7.1 billion.
Help found
Yahoo!'s recent moves in the executive ranks have given cause for optimism. No matter his other shortcomings, Scott Thompson -- now the two-people-ago CEO -- deserves credit for aggressively pursuing the sale of the Asian assets. This effort bore fruit in the Alibaba deal and got the ball rolling for the remaining sell-offs the company will need to make.
Meanwhile, the company's poaching of Mayer from Google is a coup that should earn it praise. As a longtime key executive at the latter company, she's a hardened Internet veteran who knows online technology and its market well. And she's young enough to be flexible and daring in the job, two qualities that the company badly needs. She's as yet untested as a CEO, but so what? Yahoo! needs to take a bit of a gamble now and again to wake it from its long sleep.
Levinsohn, alas, seems to have been an ace executive. His resume is one of the best in Silicon Valley, with years of experience on content even before he stepped up to run Yahoo!'s media websites and its advertising. Leaving financials aside, the former are very strong and successful, giving the company a big footprint on the Web thanks to its extensive coverage of all types of news. And the company does manage to sell plenty of ads despite its diminished position over the years.
Yahoo! was far from Levinsohn's first adventure in the wilds of Internet content. Before his fast advancement at the company, he was instrumental in engineering a fat advertising-search deal for the left-for-dead social network MySpace after it was bought by Fox Interactive Media, his unit of conglomerate News Corp. (Nasdaq: NWS). Also on his resume are stints at Time Warner's HBO and in the financial world as co-founder and partner of the company now known as Fuse Capital.
See you at the reunion
With a history like that, and the list of top-level relationships he's undoubtedly managed to build over the years, it's a shame Levinsohn won't be sticking around. But such are the ways of executive politics. In comes the new CEO, out goes the potential competition.
At this early stage, it's hard to determine how his departure will affect the company. It would be beneficial for Yahoo! to accelerate the advertising and content providing momentum Levinsohn helped provide. Hopefully for the company's shareholders, Mayer and whoever she picks for her team will ensure that happens.
All in all, Yahoo!'s latest moves are positive on balance, and it seems to be gaining more than losing from the recent executive comings and goings. At least the company has some prime talent in the CEO office. Stability is important, and it's been elusive for this company over the years. If Mayer proves her worth, she'll help the company recover quickly from the loss of its talented advertising and content exec.
