New CEO: Yahoo will reclaim its tech leadership

As Yahoo's leader, Scott Thompson plans to bring the classic Silicon Valley virtues of Innovation and disruption back to the Internet pioneer.

Yahoo headquarters in Sunnyvale, Calif.
Yahoo headquarters in Sunnyvale, Calif. Stephen Shankland/CNET

Yahoo will become a technology giant again, helping to shape how people use the Internet in the next decade, incoming Chief Executive Scott Thompson promised today.

The Internet has changed a lot in the last 20 years, but it's really still in its infancy, he said in his first public remarks today as Yahoo's CEO-to-be. Yahoo will help the Net mature by "returning to a path of industry-leading innovation," he said.

"What happens in the next five or the next ten years is hard to imagine. I expect Yahoo will be part of that," said Thompson, who is president of PayPal. "We'll be back to innovation, back to disruption. You'll see a great series of products."

When Thompson takes over as Yahoo CEO and a member of its board on Monday, he will have a colossal challenge on his hands. Yahoo remains a fixture on the Internet, with 700 million unique users visiting each month, but it's ceded initiative--and new revenue--to newer rivals such as Google and Facebook. And with Yahoo's parade of CEOs in recent years, the company has to be suffering from reorg fatigue.

Scott Thompson
Scott Thompson PayPal

For years, Yahoo has been conflicted about whether its priority should be technology or content. In its earliest days as "Yet Another Hierarchical Officious Oracle," it was necessarily involved with both: the World Wide Web was a brand-new publishing medium, and there was a lot of new content for Yahoo to publish.

In the Terry Semel years, the pendulum swung toward content as Yahoo became more of a media company. When co-founder Jerry Yang took the reins again, he focused on nerdy infrastructure: the collection of programming interfaces called the Yahoo Open Strategy that would link Yahoo to the outside Web and vice versa. Then, under Carol Bartz's brief tenure, content came back to the fore.

But Thompson has deep roots in tech. Before becoming PayPal's president, he was chief technology officer of the eBay online payment service, he oversaw Visa's global electronic payment system, and was the chief information officer of Barclays Global Investors.

Adapting Yahoo to mobile devices will be one part of the technology effort.

"Mobile is a wave that is bigger than people even imagine it to be," Thompson said. "How people interact online has changed. Devices take all shapes and sizes. You'd better have a great experience on any device the customer has."

Content, too, is still important, of course--Yahoo would break if its pendulum swung all the way to one side or the other.

Yahoo's success "is a function of delivering excellent technology and content, not one or the other," Thompson said.

When questioned by analysts on financial matters such as cutting staff to improve profit margins or hiring to improve products, Thompson wouldn't be pinned down. He needs more time to meet with staff and learn the company's details, he said.

Thompson won over at least one analyst. "He's convinced me that Yahoo's in a better place today than it was yesterday," Gene Munster of Piper Jaffray & Co. said on CNBC after Thompson's inaugural conference call.

It's not the only case where he didn't show his priorities. Other cases of straddling the fence:

• Users vs. advertisers: "One of great things we were able to achieve at PayPal is balancing the consumer's needs and consumer's experience and the merchant's needs and merchant's experience." Likewise, balancing content for users and opportunities to advertise, "if we get it right, we'll be building value at both sides of that value proposition," he said.

• Haste vs. waste: "Speed is critical," Thompson said. But he also said he'll seek an "appropriate balance of urgency and thoughtfulness."

He was unequivocal about one priority, though, as he spoke to analysts: "shareholder value and topline growth." In other words, a rising stock price and growing revenue.

To improve Yahoo's business, Thompson will take over the current process of analyzing what should stay and what should be sold off, shut down, spun off, or otherwise given the boot.

"There will be no slowdown or delay whatsoever in that process," Yahoo Chairman Roy Bostock said in the conference call. "Scott has caught up with where we are. He will help lead and direct those processes."

As Yahoo has floated adrift in the Internet industry, would-be acquirers including Silver Lake and TPG Capital have reportedly been working on plans to buy Yahoo from shareholders, taking it from a publicly traded company to a private one.

Bostock unequivocally said that wouldn't happen.

"I do not envision us not being a public company going forward," Bostock said, saying its $20 billion market capitalization makes that idea impractical.

"If you and I were to sit down and say let's take this company private, I think we'd have one hell of a challenge on our hands," he said. "It is not on the radar screen or under consideration. We expect to run this company for the benefit of the shareholders."

For Thompson, though, the challenge is more than that. His aspiration, he said, is "to return this business to being one of those great iconic brands, to be at the forefront of innovation online."

 

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