Yahoo!'s (YHOO) board has surprised yet again with the hiring of Scott Thompson - the former head of EBay's (EBAY) PayPal unit - to be its next CEO.
Image via CrunchBase
The company just finished its conference call introducing him.
Here are my key takeaways from the call:
- The best part of the news for Yahoo!'s shareholders is that Thompson had a great job leading PayPal. It's likely that in the next couple of years, PayPal will get spun-out of eBay and grow much bigger than Ebay's marketplace business. Therefore, Thompson was in line to get a big payday and a lot of power from that CEO position. So, why leave? Some have said that Yahoo!'s board might have offered him a lot of money. We'll find out after the close of business today. I expect he'll be well-paid but I doubt it would be as big as what he'd make at PayPal in a spin-out. Plus, there's a lot less risk in just keeping your head down leading PayPal - which has a wide lead on its competitors - compared to going to Yahoo! Thompson said at the end of the call that he wouldn't have come if he didn't see a "spectacular" opportunity to grow the brand. That's great news for longs. It's much more impressive that he's taking the job compared to Kevin Johnson at Juniper (JNPR) or Yusuf Mehdi from Microsoft (MSFT) taking the job.
- Thompson sounded great on the call from the perspective of understanding the importance of great products, leveraging all the data gathered by Yahoo! on its users, and the importance of mobile which has been mostly absent from Yahoo!'s roadmap. He sounds like he'll be welcomed by Yahoo! employees. His best comment on the call was saying how he understood at PayPal that the key was balancing the needs of the users with the merchants and that's going to also be true at Yahoo! with the users and the advertisers.
- Thompson's big weakness is his lack of advertising experience. He was asked about how he was going to improve the display business and he couldn't respond at all ("give me some time"). He will have to lean heavily on Ross Levinsohn (who hopefully stays).
- Bostock sounds old, crotchety, tired and sloppy in his communication skills. Expect him to be gone from the Yahoo! board in the next several months.
- Yahoo!'s stock dropped suddenly when Bostock sloppily announced that Yahoo! wouldn't go private. I immediately saw tweets saying that there wouldn't be any deal for Yahoo! That's wrong. A full buyout, PIPE deal, and cash-rich split are all still on the table.
- I think the Cash-Rich Split proceeds apace. Now Thompson will get a say on the $4 - 5 billion in assets that will be contributed to Yahoo!'s core business as part of this deal.
- A PIPE deal - while still possible -- is probably unlikely at this point. I think most big Yahoo! shareholders won't shed a tear about that. Where was the value to Yahoo! longs going to come from such a transaction?
The bottom line is that Yahoo! still has a bright future once the cash-rich split is announced and shareholders start to appreciate its full implications including: (1) the new $4 - 5 billion of assets which will come into the core business, and (2) the big pay-off from a special dividend and/or big share buyback.
[Jackson was long YHOO at the time of writing.]
