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Scott Thompson, president of eBay’s (NASDAQ:EBAY) PayPal electronic-payments unit, will assume command of Yahoo on January 9, joining a board of directors plagued with how to help the struggling Internet company survive amid heightened competition.
Yahoo’s future remains uncertain as it struggles to compete with rivals Google (NASDAQ:GOOG) and Facebook for advertising dollars.
Though the move to hire Thompson indicates that Yahoo’s board is unlikely to sell the company, the board has been questioning whether it should shed some of its Asian Internet assets, or sell a minority stake in itself to private-equity investors. Thompson will have a strong influence over the board’s final decisions on both fronts.
But Thompson wasn’t just brought in to cut the fat, and will likely work to improve online advertising services, from which the company derives most of its revenue.
Yahoo’s core business assets are stronger than people realize, Thompson told analysts in a conference call on Wednesday. Yahoo can harness its “world-class technology” and data about Internet users to provide better services to its customers — advertisers.
Yahoo’s advertisers have been keeping a tight rein on spending, with some even pulling back despite record spending growth in the online advertising industry as a whole.
Though Yahoo still maintains some of the Internet’s most popular destinations, including its Yahoo.com home page, Yahoo mail, and its sports news and entertainment sites, it now faces competition from Facebook and other content sites like ESPN.com (NYSE:DIS).
In 2011, advertisers spent $12.3 billion on graphical and video ads in the U.S. alone, but Yahoo’s share of the industry dropped to 13.1 percent last year, from 14.4 percent in 2010, according to research firm eMarketer.
Since firing former CEO Carol Bartz in September after she couldn’t increase revenue during her two-and-a-half year tenure, Yahoo has attracted minority-stake bids from multiple private-equity firms, but shareholders haven’t been happy with the low prices of the potential deals.
Yahoo has also moved to sell back parts of large stakes it owns in Asia, including Japan’s SoftBank Corp. and China’s Alibaba Group, an e-commerce giant. Negotiations are ongoing, and could yield billions of dollars in capital for Yahoo.
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