Yahoo Inc's choice of interim chief executive is a signal the company is returning to its roots selling brand advertising on its consumer websites, analysts say, even as a deal with an activist hedge fund raises new questions about its future.
Yahoo's global media head Ross Levinsohn got his chance on Monday to revive the struggling Web pioneer, as he stepped into a job that has been held by four others in the past five years.
Analysts say the former News Corp executive will bring a track record of digital media experience and deal making to Yahoo's top job.
He also has the backing of Dan Loeb, the head of hedge fund Third Point, which now has three seats on Yahoo's board and which led the ouster of former CEO Scott Thompson.
Yahoo's shares rose on Monday after Thompson stepped down just four months into the job, following a controversy over his academic record.
Thompson will not receive any severance as part of his termination, according to a Yahoo filing with the Securities and Exchange Commission on Monday. He will retains the right to a"make whole" grant of restricted stock, valued at US$6.5 million (S$8.1 million), for compensation he left behind at his former job.
Thompson's departure caps yet another tumultuous episode involving Yahoo management in recent years and comes as the company struggles to regain relevancy and revive growth amid fierce competition from rivals Google Inc and Facebook.
With Levinsohn at the helm, ableit on a temporary basis, Web industry observers said Yahoo was likely to stop trying to compete head-on with Google and Facebook in an expensive technology arms race, turning away from being a search engine and developing technology products, and focusing instead on attracting large brand advertisers to its popular online properties including Yahoo Sports and Yahoo Finance.
"Finally you have someone with the kind of background, the kind of experience and the kind of talent that would be appropriate" for a company like Yahoo, said Scott Kessler, an analyst with Standard & Poors. "Ross Levinsohn is a media guy.
He's an Internet advertising guy."
Still, Yahoo faces a steep climb as it tries to reclaim its status as a top online destination among consumers and advertisers. Visitors to Yahoo's websites spent an average of 133.1 minutes per month on its properties in March, compared with 203.6 minutes on Google sites and 369.4 minutes on Facebook, according to research firm comscore.
Yahoo's share of U.S. online display advertising revenue has shrunk from 18.4 per cent in 2008 to 10.8 per cent in 2011, according to research firm eMarketer.
"As a practical matter, what this means for the company is that the past four months have been little more than a false start, and it must once again start at the beginning in terms of establishing a strategic direction," Macquarie analyst Ben Schachter said in a research note.
Yahoo's board, which was sharply criticized for how it handled Thompson's hiring, has given three of 11 director seats to Loeb's activist hedge fund, settling a looming proxy fight, and putting Loeb in a strong position to influence strategy.
Monday's filing said Third Point and the Yahoo board will find an additional, mutually agreeable, director.
Thompson left the company 10 days after Third Point accused him of padding his biography with a computer science degree.
Third Point is one of Yahoo's largest shareholders, with a 5.8 per cent stake.
Before resigning, Thompson disclosed to the board he had been diagnosed with thyroid cancer, the Wall Street Journal reported, citing sources. Yahoo representatives did not immediately respond to requests for a comment on the report.