By MICHAEL LIEDTKE, Associated Press
SAN FRANCISCO (AP) — 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. Yahoo's revenue and stock price have sagged while rivals such as Google Inc. and Facebook Inc. are growing 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 was successful 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 aid 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, 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 told employees in a Sunday memo that was provided to The Associated Press.
Levinsohn, 48, plans to address workers at a companywide meeting Monday afternoon.
"The bottom line is that the situation at Yahoo is a mess," Macquarie Securities analyst Ben Schachter wrote in a Monday research note. "It remains unclear how the new management will turn things around at Yahoo.com and how quickly yet another new strategy can be formulated."
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 already had announced plans to step down at the company's annual meeting this year have left. All five signed off on hiring Thompson so they all looked bad with the recent revelation that they didn't catch an inaccuracy circulating for years about his education.
Three of Yahoo's vacated board seats will be filled by Loeb and two allies, former MTV Networks executive Michael Wolf and turnaround specialist Harry Wilson.
Alfred Amoroso, a veteran technology executive who joined Yahoo's board just three months ago, replaces Bostock as chairman.
The reshuffled board will now try to complete a long-delayed deal to sell part of Yahoo's roughly 40 percent stake in China's Alibaba Group, an investment that investors view as the company's most valuable asset. That deal could generate billions of dollars for Yahoo shareholders and ease some of the pressure on Levinsohn.
Loeb, who controls a 5.8 percent stake in Yahoo though his Third Point hedge fund, had been waging a campaign to gain four seats on the company's board. Loeb settled for a compromise and Thompson's departure. The two had a falling out in late March when Thompson told Loeb he wasn't qualified to be on Yahoo's board.
Although Yahoo gave no official explanation for Thompson's abrupt exit, it was clearly tied to inaccuracies in his biography on the company's website and in a recent filing with the Securities and Exchange Commission.