Yahoo still has credibility issues, even after casting aside CEO Scott Thompson because his official biography included a college degree that he never received.
The troubled internet company’s next challenge will be convincing its restless shareholders and demoralized employees that the turnaround work started during Thompson’s tumultuous four-month stint as CEO won’t be wasted.
It won’t be an easy task, given that Yahoo Inc. has now gone through four full-time CEOs in a five-year stretch marked by broken promises of better times ahead. Instead, Yahoo’s revenue and stock price have sagged during a time when rivals such as Google and Facebook as advertisers spend more money online.
“Yahoo has been floundering for years and it looks like there is going to be at least several more months of indirection now that another CEO is coming in,” said Adam Hanft, who runs a consulting firm that specializes in brand reputation and crisis management.
Yahoo’s hopes are now resting on Ross Levinsohn as its interim CEO. Levinsohn had a successful stint running internet services within Rupert Murdoch’s media empire at News Corp. before one of Yahoo’s former CEOs, Carol Bartz, hired him in November 2010 to help her in her mostly fruitless attempt to fix the company.
Thompson, who was hired as Yahoo’s CEO in January to fill a void created by Bartz’s firing, had promoted Levinsohn last month to oversee the company’s media and advertising services throughout the world.
“This may seem like a great deal of news to digest, but as you are all keenly aware, Yahoo is a dynamic, global company in a dynamic, global industry, so change _ sometimes unexpected and sometimes at lightning speed _ is something we will continue to live with and something we should embrace,” Levinsohn wrote in a Sunday memo to employees that was provided to the Associated Press.
Levinsohn, 48, plans to address workers at a companywide meeting Monday afternoon.
Yahoo tried to make Levinsohn’s job slightly easier by reaching a truce with dissident shareholder Daniel Loeb, a hedge fund manager who exposed the inaccurate information on Thompson’s bio and had made it clear he would continue to publicly skewer the company unless he was given a chance to help develop a turnaround strategy.
To placate Loeb, Yahoo is shaking up its board of directors, which has been in a state of flux for several months.
Yahoo Chairman Roy Bostock and four other directors who had already announced plans to step down at the company’s annual meeting later this year are leaving the board immediately. All five of those directors signed off on the hiring of Thompson, a move that made them all look bad by the recent revelation that they didn’t catch an inaccuracy circulating for years about his education.
Although Yahoo gave no official explanation for Thompson’s abrupt exit, it was clearly tied to inaccuracies that appeared on Thompson’s biography on the company’s website and in a recent filing with the Securities and Exchange Commission.
(A new report in The Wall Street Journal that cites unnamed sources says Thompson had told the board he has been diagnosed with thyroid cancer, and that Thompson’s decision to resign was partly influenced by his diagnosis.)
The bio listed two degrees – in accounting and computer science – from Stonehill College, a small school near Boston. After discovering Thompson never received a computer science degree, Loeb exposed the fabrication in a May 3 letter to Yahoo’s board. The revelation raised questions about why the accomplishment had periodically appeared on his bio in the years while he was running PayPal, an online payment service owned by eBay Inc.
Yahoo initially stood behind Thompson, brushing off the inclusion of the bogus degree as an “inadvertent error,” but harsh criticism from employees, shareholders and corporate governance experts prompted the board to appoint a special committee to investigate how the fabrication occurred.
Thompson, 54, spent much of the past week scrambling to save his job. He sent a memo to employees, apologizing for distractions caused by news of the illusory degree and then sought to assure other Yahoo executives that he wasn’t the source of the inaccuracy. He blamed a Chicago headhunting firm, Heidrick & Struggles.
