Boohoo for Yahoo
CAN Yahoo do no right?
The Internet pioneer and once-upon-a-time leader in search this week announced the departure of its chief executive, Scott Thompson, after just four months on the job, over accusations that he fudged his resume.
Thompson, who joined Yahoo from eBay’s Paypal division, was the fourth chief executive to leave Yahoo in five years.
Yahoo fired its previous chief executive, Carol Bartz, in September, after she failed to reverse a decline in advertising revenues in 2 ½ years.
Under Thompson, Yahoo co-founder Jerry Yang left the board in January, and management announced a reorganization that would lay off 2,000 workers, or about 14 percent of the workforce.
Ross Levinsohn, formerly Yahoo’s executive vice president of the Americas region, was named interim chief executive, the company said in a statement.
Press reports said Thompson’s exit was spurred by Third Point, the hedge fund that owns nearly 6 percent of Yahoo shares. Third Point claimed that Thompson had padded his resume with a degree in computer science from Stonehill College, where he earned an accounting degree.
Privately, Thompson told his colleagues that he wasn’t responsible for the incorrect information and blamed a Chicago headhunting firm, Heidrick & Struggles, for the error, the Associated Press reported. The headhunter, however, has since denied Thompson’s claim.
Carlos Kirjner, a senior analyst at Sanford C. Bernstein, suggested that Thompson’s previous job as president of PayPal hadn’t prepared him for Yahoo.
“It is very different to be CEO of a growth company, making choices between opportunities, and to be CEO of a company in turnaround mode, whose parts are declining or losing share,” Kirjner told AP.
Thompson’s resume discrepancy might have been more forgivable at a company that was making money for shareholders, added James Post, a management professor at Boston University.
“Yahoo has been embattled for such a long time that there are a lot of people prepared to believe the worst about that company,” said Post, who specializes in corporate governance and professional ethics. “When you’re angry at the management and the board, when nothing’s going right and you’re losing money, it’s understandable that shareholders would adopt an ‘off with their head’ attitude.”
From an end-user’s perspective, it isn’t hard to understand Yahoo’s steady decline.
Yahoo claims that its sites for e-mail, news, sports, finance and photo-sharing are used by 500 million people a month, but in the last few years, I’ve not been one of them.
I still maintain a Yahoo Mail account, but hardly use it because Gmail, for all its quirks, is much faster and more efficient. Even the “new” Yahoo Mail is slow and unwieldy by comparison (you can’t even view unread messages), and its ability to search through messages is erratic at best. The last straw was the constant delays I experienced when clicking on a drop-down menu.
It’s been even longer since I used Yahoo to find anything on the Web. Once the leader in Internet search, Yahoo ceded its lead years ago to Google, and now relies on Microsoft Bing to power its own search Web site. And I don’t even use Bing, despite their odious product placement spots on Hawaii 5-0 and CSI.
Yahoo’s old-style portal may still be compelling to some users, but I’ve never been attracted to the over-busy home page. The localization of the Yahoo portal has done nothing to change my mind.
Finally, I’m not big on sharing photos online, but I suspect more people now use Facebook, not Yahoo’s Flickr, to do this.
As it stands today, Yahoo remains on the periphery of my online world, engaged in a number of areas that are important to me, but leading in none of them.
Will Yahoo still be able to turn things around? Clearly, its previous strategy of growth through acquisitions has not worked out all that well. Nor have more recent efforts to cut costs by abandoning or selling off its businesses. Without an exciting, market-leading reason for its existence, there’s very little cause for yodeling at Yahoo.