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Wall Street Weighs in on New Yahoo CEO

Scott Thompson Executive Portrait - P 2012

Scott Thompson "does not have any demonstrable content or media experience, which proved to be a challenge for the company's previous CEO, Carol Bartz," says one analyst, while another calls him "an ideal candidate."

NEW YORK - Yahoo's stock closed down 3.1 percent on Wednesday after the company announced that it has picked PayPal president Scott Thompson as its new CEO.

Industry and Wall Street observers highlighted that he doesn't have any business celebrity cache and that his background is in technology rather than media or advertising expertise.

Evercore Partners analyst Ken Sena called Thompson a "talented executive" with a "great track record who "helped establish [PayPal] as a leading online payment service and more than doubled the company's user base."

But he also highlighted his "limited content and media background. "Thompson does not have any demonstrable content or media experience, which proved to be a challenge for the company's previous CEO, Carol Bartz," Sena said. "Additionally, while Thompson can clearly handle growth-stage companies, he does not possess evident turnaround experience, which we believe is critical given the state of Yahoo's core business."

Still, several analysts said they see Thompson's track record benefiting Yahoo and see his appointment as a positive.

Barclays Capital analyst Anthony DiClemente argued that Thompson's appointment is "incrementally positive for Yahoo."

He explained: "We believe that Scott Thompson has been a strong operator at PayPal…We think he is an ideal candidate in that he has a proven track record and has had a leadership role at a major web 1.0 company that has successfully become a significant web 2.0 company. "

Credit Suisse analyst Spencer Wang echoed that sentiment. "Based on our experience with Mr. Thompson, we hold him in high regard given his track record of success at PayPal, where he increased users, revenues, and margins by expanding aggressively off-eBay," he wrote in a report. "As a result, we consider Mr. Thompson to be a very capable executive."

Stifel, Nicolaus analyst Jordan Rohan also called the new CEO "solid" and said that "investors should welcome the hiring of Scott Thompson."

He continued: "Yahoo has been lacking a unified strategic vision for several years. We believe Scott Thompson may be able to bring that vision, as well as the know-how to build a healthy ecosystem around Yahoo’s core set of assets. "

Rohan added that the stock may trade down on concerns that the CEO appointment may rule out asset sales that Yahoo has been evaluating. "We think this would present a buying opportunity," he said. "Clearly, the company is better off having a permanent CEO in place during that process."

What are Thompson's key challenges? Wang mentioned enhancing Yahoo's "core user value proposition, accelerating innovation and product development, protecting market share from growing competition in display, and improving the company's people strategy."

He added: "We are eager to hear more of Mr. Thompson's vision and are taking a wait-and-see approach for the time being." As a result, he maintained his "neutral" rating on the stock.

Email: Georg.Szalai@thr.com

Twitter: @georgszalai