Yahoo’s Next CEO Must Be Magical

Scott Thompson

The debacles continue to mount at Yahoo. After ousting Scott Thompson from CEO, the search begins for the next CEO of the once-mighty web portal and search engine. There are those who would recommend a safe play, someone who won’t make waves and who has a squeaky-clean history (that gets completely verified, of course).

This would be a bad move. They already tried that with Thompson. They’re on their last leg to remain relevant as the weight of their sheer size is starting to weigh on a foundation built from poor decisions and bad business practices over the last few years. They made an awful decision by not taking the money when it was being dangled in front of them. Now, their only hope is to rebuild, revamp, and realign.

“The disfunctionality of this company is relatively unparalleled. Nothing they do seems to work,” said Lawrence Haverty from GAMCO Investors. “Right now I think a sale of the company is the best option. We believe the assets are worth somewhere north of $20 a share on a break up basis.”

They need a powerful CEO, one with panache, one who is willing to take the necessary risks that the company requires today. They need the risks to pay off. They need a face that will be a personality as much as a decision-maker.

They need someone magical.

The company’s global media head, Ross Levinsohn, was named interim-CEO. He may be the right choice for the job permanently after being passed over for Carol Bartz in 2009 and again for Thompson 4 months ago. He has current support from Daniel Loeb who led the charge against Thompson. His hedge fund owns 5.8% of Yahoo and just gained 3 board spots.

For Yahoo to succeed (which is to say that they either rebound enough to grow again or stabilize enough to get gobbled up by someone else), Levinsohn or his replacement will need to be like Steve Jobs. The Yahoo CEO has to be willing to shine in the spotlight, bring about bold changes that go beyond the 2000 job cuts Thomspon was working on, and work inside and out of the web industry to form partnerships that make news.

Yahoo’s future will be determined by their choices over the next few months. A conservative stance won’t fly for a company that’s best asset (other than $2.65 billion in cash and 40% ownership in Chinese e-commerce company Alibaba) is traffic control. They still have a strong hold over internet traffic by both bringing it in and distributing it to the internet. This one asset must be honed for either success point (sale or rebound) to become a reality.

The next CEO is the key. Whether Levinsohn or someone else, the leader must be more than a pawn for the board. There needs to be magic involved. The conservative approach will only prolong the current state of their unfortunate existence.

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